Key takeaway
- Celsius is hitting KeyFi with a lawsuit, claiming strategy firm DeFi is responsible for the loss of tens of millions of dollars of Celsius.
- According to Celsius, KeyFi was “unable to distribute coins profitably” and stole large sums from the cryptocurrency lender.
- KeyFi claims to have been scammed by Celsius, not the other way around.
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Celsius accuses KeyFi of theft and mismanagement of funds during their previous partnership.
“Many tens of millions” in cryptocurrencies
Celsius is counter-suing his former partner.
The struggling cryptocurrency lending company filed a lawsuit today against decentralized finance strategy firm (DeFi) KeyFi and its CEO Jason Stone, claiming that KeyFi’s “incompetence, deception and conversion” were responsible for the loss of millions of dollars of Celsius during the their previous partnership. The suit arrives a month after KeyFi accused Celsius to defraud him.
Celsius said in court documents that KeyFi stole tens of millions of dollars in cryptocurrencies from Celsius wallets, used Celsius funds to buy hundreds of NFTs and “numerous blockchain-related companies”, and laundered the stolen coins via software to Tornado Cash privacy.
The cryptocurrency lender further said that while Stone presented himself as a “pioneer” in DeFi tools early in the partnership between the two companies, he proved “unable to distribute coins profitably” which resulted in additional losses. of “many tens of millions of dollars” for the company.
A legal representative for Stone he answered to the lawsuit on Twitter stating that “the compensation that KeyFi received (including in the form of NFT) was expressly authorized by Celsius CEO Alexander Mashinsky” and that the lawsuit was “an attempt to rewrite history and use KeyFi and Mr. Stone as a scapegoat for [Celsius’] organizational incompetence “.
Once a leading cryptocurrency lending company, Celsius suspended client fund withdrawals on June 13, citing “extreme market conditions” and has since filed for bankruptcy. Recent reports claim Mashinsky allegedly used client funds to trade Bitcoin worth hundreds of millions of dollars, bypassing senior traders with decades of experience and suffering a trade loss of $ 50 million in January 2022 alone.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.