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Celsius’ lawsuit against Chainalysis is absolutely wild.

The debtors are suing the firm on a total of SIXTEEN counts for a fraudulent audit of the scam's assets under management, misleading customers and investors.

Here’s the gist of it:

Celsius was a massive Ponzi scheme in which the founders manipulated the value of CEL tokens to dump their holdings on customers and investors.

In 2020, Celsius conducted what it called a ‘third-party audit’ of their total assets under management in partnership with Chainalysis, finding that Celsius had billions of Dollars “based on transactions, total withdrawals and total deposits.”

Unfortunately, this “first third-party verification of Celsius Network’s assets” was a complete and total lie, according to the complaint.

Not only did Chainalysis not conduct the audit, the complaint states – it was merely a scheme designed by Celsius founder Mashinsky that Chainalysis signed off on.

It also knew that the $3.3B figure was not, in fact, calculated based on transactions, deposits and withdrawals as stated in the press release, but inflated by including the value of CEL tokens Celsius held, the complaint alleges.

Chainalysis *admitted* that it knew the announcement was misleading and deceptive in an email to Celsius, the complaint states:

Chainalysis was receiving inquiries about "doing other audits,” which “raised a lot of questions that we needed to answer,” because it made “it seem like we [Chainalysis] conducted the audit.”

But why would Chainalysis lie about Celsius?

According to the complaint, Chainalysis was growing its customer base, and the more assets Celsius had under management, the better Chainalysis would look in return, helping expand its business.

Mind you that this is not the first time Chainalysis is facing criticisms for potentially nefarious motives and alleged miscalculations.

In the criminal case against Roman Sterlingov, Chainalysis testified that it effectively had no evidence for the scientific reliability of its Reactor product used to implicate Sterlingov as the operator of Bitcoin Fog – the same software as used by Celsius.

At the same time, the defendants alleged that Chainalysis was effectively using the prosecution to market its for-profit business. To Chainalysis, the defendants seemed to argue, it didn’t matter who went to jail for operating Bitcoin Fog, as long as someone did.

Further highlighting that findings by Chainalysis’ flagship software Reactor may best be interpreted with caution, the firm disclosed in January that it wrongfully attributed almost twice the volume of hacked funds to North Korea than funds it found actually related "upon further investigation".

A big oops, given the fact that Chainalysis' findings on North Korea are routinely cited by lawmakers, while the firm markets itself as "the only company in the world with a stamp of approval for our ability to look at a blockchain and create evidence".

May this lawsuit put an end to the use of for-profit, closed-source software to make unverifiable claims that end up hurting thousands of innocent people in the process and bring these eternal assholes to justice.

Full story:
https://www.therage.co/chainalysis-sued-celsius-scam/