Judge Trims Celsius Lawsuit Against Chainalysis, but One Claim Over the $3.3B “Audit” Moves Forward

A US federal judge has thrown out most of the claims Celsius Network’s litigation administrator brought against Chainalysis. One survives: an allegation that the firm helped Celsius insiders breach their fiduciary duties. Judge Margaret Garnett issued the ruling Tuesday.

Which Claims Were Dismissed

Twelve claims were dismissed with prejudice, so they cannot be refiled in this case. Three consumer-protection claims were dismissed without prejudice. The plaintiffs have until Oct. 20 to amend them or tell the court they won’t.

Aiding-and-Abetting Claim Survives

Garnett found the complaint sufficiently alleged that Chainalysis knew a 2020 Celsius press release contained false statements and helped spread them. Chainalysis had asked for the whole complaint to be dismissed. The allegations have not been proven.

The $3.3 Billion Celsius “Audit”

In 2020, Celsius hired Chainalysis to calculate its assets under management with the Reactor software, then promoted the result as an audit. The complaint says a Celsius executive first arrived at about $1.18 billion before methodology changes pushed the figure to roughly $3.3 billion. A Dec. 9, 2020 press release announced the “audit,” and the plaintiffs say Chainalysis helped draft, edit and approve it while knowing the “audit” and “independent verification” wording was false or misleading.

Celsius Bankruptcy Background

Celsius froze withdrawals in June 2022, locking customers out of about $4.7 billion, and filed for bankruptcy in July 2022. The suit was brought by Blockchain Recovery Investment Consortium, which acts as litigation administrator for the estate and seeks to recover funds for creditors. Chainalysis declined to comment, and the administrator had not responded.