Celsius accused of ‘Ponzi scheme’! Former employee: Investing with customer deposits, manipulating currency prices

Crypto lending platform Celsius has been accused of fraud by a former investment manager. Plaintiff Jason Stone alleges that Celsius ran a Ponzi scheme, used customer deposits to invest and manipulated the price of its own cryptocurrency, and lost hundreds of millions of dollars by failing to properly hedge risks, resulting in the freezing of customer assets.

On June 12 this year, Celsius suddenly announced the suspension of user withdrawal, currency exchange and transfer functions, citing “extreme market conditions”, and then began to spread the news of insolvency, deep liquidity crisis and even on the verge of bankruptcy.

Jason Stone tweeted that the investment company KeyFi he founded was partially acquired by Celsius in 2020, and since then, he has worked for Celsius for a long time, focusing on staking business and deploying DeFi strategies. But now, the company has formally filed a lawsuit against Celsius in the New York State Supreme Court, accusing Celsius of failing to meet its contractual obligation to pay KeyFi a “multi-million dollar” share of the profits.

Jason Stone pointed out that Celsius created the giant whale address “0xb1” in August 2020, and transferred customer deposits to this address for investment, and then handed over to him to take the lead in management, and the two parties shared the private key. To this end, KeyFi also signed a client money management agreement with Celsius, as well as co-founded a new company called “Celsius KeyFi”.

From August 2020 to April 2021, Jason Stone led the management team of “0xb1” and at one point managed $2 billion for Celsius, investing the funds in DeFi protocols, staking, NFTs and other strategies. Jason Stone said:

Celsius assured me that their trading team fully hedged any potential impermanent losses from our activity in the liquidity pool. They also assured me that they have risk management and hedging against volatility in cryptocurrency prices.

It wasn’t until the end of February 2021 that Jason Stone realized something was wrong, saying: “We found out Celsius lied to us. They didn’t hedge our activity and they didn’t hedge against cryptocurrency price volatility.”

According to Jason Stone, Celsius used $90 million worth of Bitcoin deposits in 2020 to “artificially inflate” the price of its own platform currency CEL, and borrowed 1 billion USDT from stablecoin issuer Tether to make up for the company’s assets holes in the balance sheet.

Jason Stone believes that Celsius refused to admit its mistakes, did not admit its own negligence in risk management and accounting, even tried to shift the responsibility to him, and refused to pay KeyFi millions of dollars, so decided to take legal steps to file a lawsuit against Celsius litigation.

Article Disclaimer

The Information Presented Here Does Not Constitute Investment Advice Or An Offer To Invest. The Statements, Views, And Opinions Expressed In This Article Are Solely Those Of The Author/company And Do Not Represent Those Of Coinworldstory. We Strongly Advise Our Readers To Do Your Own Research (DYOR) Before Investing In Any Cryptocurrency, Blockchain Project, Or Ico, Particularly Those That Guarantee Profits. Furthermore, Coinworldstory Does Not Guarantee Or Imply That The Cryptocurrencies Or Projects Published Are Legal In Any Specific Reader’s Location. It Is The Reader’s Responsibility To Know The Laws Regarding Cryptocurrencies And Icos In His Or Her Country. Please Respect Your Country Law & Take Advice From Your Advisor .

Source