Chainalysis faces one Celsius claim over disputed ‘audit’

A federal judge dismissed most claims in Celsius Network’s lawsuit against Chainalysis but allowed one aiding-and-abetting claim to proceed over a disputed 2020 “audit.”

US District Judge Margaret Garnett denied Chainalysis’ request to dismiss the surviving claim in a ruling issued Tuesday. She found that the complaint sufficiently alleged Chainalysis knew a Celsius press release contained false or misleading statements and helped distribute them.

The claim alleges that Chainalysis aided Celsius insiders in breaching their fiduciary duties. The allegations have not been proven in court.

Garnett dismissed 12 other claims with prejudice, meaning they cannot be amended in the case. She dismissed three consumer-protection claims without prejudice, allowing the plaintiffs until Oct. 20 to amend them or notify the court that they will not pursue them.

Blockchain Recovery Investment Consortium, or BRIC, filed the lawsuit. BRIC acts as the litigation administrator and recovery manager for the Celsius estate and is pursuing claims on behalf of Celsius and certain former customers.

The dispute centers on a 2020 engagement in which Celsius used Chainalysis’ Reactor software to calculate its assets under management. According to the complaint as summarized by the court, a Celsius executive initially calculated about $1.18 billion in assets. Changes to the calculation method later increased the figure to about $3.3 billion.

A Dec. 9, 2020, Celsius press release described the results as an “audit” and an “independent verification” of about $3.3 billion in assets. The figure was based on transaction data, total deposits and total withdrawals since Celsius began operating in 2018.

BRIC alleges that Chainalysis helped draft, edit and approve the press release and knew its description of the work was false or materially misleading. Chainalysis sought dismissal of the entire lawsuit.

Chainalysis did not comment. Celsius’ litigation administrator had not responded by publication.

Celsius froze customer withdrawals in June 2022 and filed for bankruptcy the following month during a broader cryptocurrency market downturn. Customers were unable to access about $4.7 billion in assets. The lawsuit is part of the estate’s effort to recover funds for creditors.