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KeyFi, the Former Partner of Celsius Is Suing Them for Fraud

KeyFi, the Former Partner of Celsius Is Suing Them for Fraud
KeyFi’s CEO, Jason Stone, claims that Celsius owes money due to KeyFi briefly managing customer cash on its behalf. KeyFi’s attempt to unwind its investments allegedly revealed that Celsius had failed to protect against risk.

The CEO of KeyFi, who once oversaw a portion of Celsius’ client deposits, accused Celsius of fraud.

KeyFi’s co-founder and CEO, Jason Stone, claims that Celsius took advantage of the company during their brief business partnership.

KeyFi, a business Stone launched in 2019, was first acquired by Celsius in the middle of 2020. Stone claims that his business “pivoted” to develop DeFi solutions for Celsius at that time.

The management of a new Ethereum address with the prefix 0xb1 that included deposits from Celsius’ consumers was taken over by Stone’s team in August 2020. KeyFi was given the private keys to that location by Celsius and was responsible for investing customer money.

Later, the two businesses stopped cooperating. Before the two businesses’ separation, Stone stated in his Twitter thread that KeyFi was “handling approximately $2 billion of assets” at one point.

Celsius Owes Money to KeyFi

According to Stone, the risk management team at Celsius kept an eye on KeyFi’s investment plans. It reassured KeyFi that it was protecting itself from market swings and temporary losses from liquidity pools.

But KeyFi quickly discovered that Celsius wasn’t protecting against those dangers. Celsius, on the other hand, had “bare exposure to the market.” The loss of Celsius had purportedly occurred before KeyFi attempted to unwind its DeFi assets.

Celsius allegedly failed to acknowledge Stone’s resignation and withheld payments owed. Stone claims that Celsius continued to hold him accountable because he thought the loss proved that he had stolen money from it.

Stone claims to have made private efforts to settle the conflict with Celsius and collect the money owed. Stone is now bringing the case to court to settle it.

In addition, the lawsuit claims that Celsius misreported some transactions and “leveraged [its] customer deposits to manipulate [the] crypto-asset markets.”

Celsius Withdrawals Stay frozen

Celsius’s claims and the fact that Celsius collaborated with KeyFi remain unanswered. The two parties allegedly worked on a handshake agreement informally.

On June 12, Celsius froze on withdrawals and other activities, and she hasn’t said much since. The company announced on June 30 that it was looking into strategic transactions and liabilities restructuring.

According to other sources, the corporation is reorganizing its board of directors, and businesses like Goldman Sachs appear ready to buy the business’ assets for $2 billion.

Twenty-five days have passed since Celsius’s services were shut down. It is becoming less certain if clients will eventually recover access to their assets as the crisis worsens.