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HomeCasesIn re Celsius Network LLC
Evidence review: primary document verified. The linked primary document was extracted and checked with page-level evidence locators.
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Corpus matter record

In re Celsius Network LLC

S.D. New York (Bankruptcy) · Nov 9, 2023

NY / federalEditorial impact: lowmisrepresented authoritybankruptcytrialNone Adjudicated
Direct answer

What happened in this matter?

The court excluded the expert's valuation report under Rule 702 because it was generated by AI, lacked sufficient factual support, contained numerous errors, and relied on an unverified, non-peer-reviewed methodology. The expert failed to review the underlying source material, and the report included inaccurate descriptions of the token's features.

Why the court cared
The court reasoned that the report failed Rule 702 standards because it was not based on sufficient facts or data, lacked citations, contained numerous errors (including duplicated text and incorrect dates), and relied on a personally developed 'fair value' method that was not peer-tested or widely accepted in the industry.
Why it matters now
AI-drafted expert reports must be cite-checked and source-anchored before counsel signs off — unreliable reports get excluded under Rule 702.

Why this matter is tracked

Misrepresented: Other | Report generated by AI contained almost no citations and the expert did not review underlying sources; court found it was not based on sufficient facts or data and excluded the report. Outcome: Expert report excluded as unreliable. The court found the 172-page valuation report was generated by AI at the expert's instruction, contained almost no supporting citations, factual inaccuracies (e.g., asserting governance rights CEL lacked), duplicated text and incorrect trade dates, and relied on a non-peer-reviewed 'fair value' method. The report was excluded under Rule 702.Counsel at fault was later sanctioned both in Texas, and in New York through a reciprocal sanction (see here).

Operational lesson

AI-drafted expert reports must be cite-checked and source-anchored before counsel signs off — unreliable reports get excluded under Rule 702.

Record details

New YorkSingle-state evidence scope
Explore NYOpen its source-linked jurisdiction page and related matters.
CourtS.D. New York (Bankruptcy)
Jurisdictionfederal
Circuit2nd Circuit
DateNov 9, 2023
UN
AI toolUnidentified
Party typeExpert
OutcomeExpert report excluded as unreliable.
Known amountNot recorded
Professional sanctionNo
Attribution boundary

What the record establishes about AI use

explicitly recorded

The court refers to the report as being written by artificial intelligence.

Procedural posture

Motion to exclude expert report and testimony granted in part.

Correction behavior

Correction behavior is not separately verified in the current record.

Tracked discrepancy record

2 citation, quotation, or authority issues are recorded in the source dataset.

  1. Misrepresented: Other | Report generated by AI contained almost no citations and the expert did not review underlying sources; court found it was not based on sufficient facts or data and excluded the report.
  2. Misrepresented: Exhibits & Submissions | Report asserted features for CEL (e.g., governance rights) that the token never had; court identified this factual inaccuracy as undermining reliability.

Questions this record answers

What happened in In re Celsius Network LLC?
The court excluded the expert's valuation report under Rule 702 because it was generated by AI, lacked sufficient factual support, contained numerous errors, and relied on an unverified, non-peer-reviewed methodology. The expert failed to review the underlying source material, and the report included inaccurate descriptions of the token's features.
Why does In re Celsius Network LLC matter for legal AI risk?
AI-drafted expert reports must be cite-checked and source-anchored before counsel signs off — unreliable reports get excluded under Rule 702.
What does the public record establish about In re Celsius Network LLC?
The record summarizes the outcome described in the linked public source. The recorded document is hosted in the upstream publisher archive. This page is not a substitute for the complete docket, subsequent history, or jurisdiction-specific advice.
Which source supports this In re Celsius Network LLC summary?
The recorded source is Damien Charlotin case archive. It is classified as publisher document archive; review the linked material and subsequent docket history before relying on this summary.

Related matters

Related by court, jurisdiction, tool, or classified failure pattern. Similarity does not imply the same facts or outcome.

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