Celsius Was Sued. The Platform Is Accused of Fraud

Landing platform Celsius was sued Thursday by a former asset manager and claims the firm was an elaborate "Ponzi scheme." The lawsuit alleges that Celsius used customer deposits to inflate the price of its own CEL token and manipulate the broader cryptocurrency markets. The lawsuit was filed by KeyFi, which managed the Celsius assets until March last year. The lawsuit also alleges that the platform did not pay KeyFi for its services.

Jason STONE, a key plaintiff in the case, said KeyFi managed nearly $2 bln worth of Celsius assets at one point. It was then that the asset manager became aware that Celsius had no hedging against risks. Stone revealed on Twitter that Celsius' continued lack of risk management has led to a liquidity crisis of the platform. According to recent reports, Celsius has hired restructuring lawyers and is in talks for a potential bankruptcy.

The platform recently paid off its debt to the Maker DAO. But shortly thereafter, Celsius moved about $500 mln worth of Wrapped Bitcoin to FTX. This may indicate that Celsius is preparing to dump the token in order to increase its liquidity. But it remains unclear whether the lender will be able to fully pay off its customers.

Image: Medium