A US federal judge has dismissed most claims brought against Chainalysis by Celsius Network's litigation administrator, though one significant claim will proceed to litigation.
US District Judge Margaret Garnett denied Chainalysis' motion to dismiss an aiding-and-abetting claim in a ruling issued Tuesday. The judge found that the complaint sufficiently alleged that Chainalysis knew a 2020 Celsius press release contained false statements and helped disseminate them.
The court dismissed 12 other claims with prejudice, preventing the plaintiffs from amending them in the current case. Three consumer-protection claims were dismissed without prejudice, giving plaintiffs until October 20 to amend those claims or notify the court they will not do so.
Background on the Celsius Bankruptcy
Celsius, a cryptocurrency lending platform, filed for bankruptcy in July 2022 during the crypto market downturn. The company had frozen customer withdrawals a month earlier, leaving customers unable to access approximately $4.7 billion in assets. The Chainalysis lawsuit is part of the estate's effort to recover funds for creditors.
The Disputed Audit and Asset Calculation
In 2020, Celsius engaged Chainalysis to help calculate its assets under management using Chainalysis Reactor software. The results were subsequently publicized in a press release.
According to the complaint, a Celsius executive initially calculated approximately $1.18 billion in assets using Reactor. Following changes to the methodology, the figure increased to roughly $3.3 billion.
On December 9, 2020, Celsius issued a press release announcing an "audit" confirming approximately $3.3 billion in assets using Chainalysis Reactor, based on transactions, total deposits, and total withdrawals since Celsius launched the service in 2018.
The complaint alleges that Chainalysis helped draft, edit, and approve the release while knowing that descriptions of the work as an "audit" and "independent verification" were false or materially misleading. Chainalysis has stated it was unable to comment on the matter.
Litigation Administrator and Claims
The Blockchain Recovery Investment Consortium, or BRIC, brought the lawsuit as litigation administrator and recovery manager for the Celsius estate, pursuing claims on behalf of Celsius and certain former customers.
