Celsius Is Being Sued by Its Ex-Partner KeyFi

The CEO of KeyFi, which previously administered a part of Celsius’ client deposits, has accused Celsius of fraud.

According to KeyFi co-founder and CEO Jason Stone, Celsius cheated the company during their short commercial engagement.

Stone established KeyFi in 2019, and Celsius started to purchase it in the middle of the year 2020. Stone states that he “refocused” his company at that time to develop DeFi solutions for Celsius.

Stone’s team started managing a new Ethereum address beginning with 0xb1 to store client deposits in August 2020. KeyFi was given the private keys to this address and the responsibility of investing client monies by Celsius.

Eventually, the two firms ceased operating together. Prior to the separation of the two firms, KeyFi “managed approximately $2 billion in assets,” according to Stone’s Twitter thread.

KeyFi claims that Celsius owes it cash

According to Stone, the risk management team at Celsius watched KeyFi’s investing strategy. It told KeyFi that it was hedging against market swings and temporary liquidity pool deficits.

However, KeyFi quickly discovered that Celsius was not, in reality, protecting itself from these vulnerabilities. Rather, Celsius had “bare market exposure.” Celsius had apparently suffered irreversible damage by the time KeyFi sought to unwind its DeFi settings.

Celsius, according to a court document, refused to acknowledge Stone’s departure and withheld payment. Stone indicates that Celsius assumed the loss indicated he had stolen money from the company and proceeded to hold him accountable.

Stone claims he has made private efforts to settle the problem with Celsius and collect the unpaid funds. Now, Stone is attempting to resolve the dispute in court.

In addition, this complaint claims that Celsius “leveraged consumer deposits to influence crypto-asset markets” and incorrectly accounted for some transactions.

Temperature Withdrawals in Celsius Remain Frozen

Celsius has neither commented on the allegations nor verified its collaboration with KeyFi. According to the complaint, the parties collaborated on a handshake deal.

On June 12, Celsius halted withdrawals and other activity and has said nothing since. The company said on June 30 that it is investigating strategic deals and liabilities restructuring.

Other sources indicate that the company’s board of directors is being restructured, while corporations like Goldman Sachs look eager to purchase the company’s assets for $2 billion.

It has been twenty-five days since Celsius ceased operations. As the situation persists, it becomes more uncertain if customers will recover access to their assets.

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