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The embattled cryptocurrency lender has been sued by a former Celsius contractor who accuses the company of mismanagement and fraud and claims it is due money based on hundreds of millions of dollars in revenues. In a document submitted to the New York state court on Thursday, Jason Stone's company KeyFi Inc. alleged that Celsius had committed fraud and owed KeyFi millions of dollars under a profit-sharing arrangement. In 2021, Stone worked for Celsius Network as well.
KeyFi Inc Worked With Celsius
According to Stone's post, KeyFi Inc. worked with Celsius between August 2020 and April 2021 to design and implement DeFi strategies for the lending platform. According to the petition on Thursday, KeyFi "produced hundreds of millions of dollars in income for the parties' mutual benefit" throughout this time. The lawsuit states that Celsius had told Stone that its trading teams were "adequately hedging any potential temporary loss" from their participation in liquidity pools and that its risk management team was keeping an eye on its operations. Based on the filing, Celsius sustained significant losses during the 2021 cryptocurrency bull run, which started in January 2021, due to its careless and dishonest failure to hedge its investments. To "lure new depositors," the institution started providing high-interest rates as it was experiencing a liquidity crisis, turning it into a Ponzi scam. Since ceasing withdrawals on June 12, one month after the Terra blockchain started to collapse, Celsius has been under considerable investigation.