KeFi CEO to sue Celsius Network

Crypto lender Celsius Network has been accused of fraud by ex-employee Jason Stone.

The CEO and co-founder of KeyFi claims the company was failing to protect customer deposits by actioning basic accounting controls.

“We discovered Celsius had lied to us. They had not been hedging our activities, nor had they been hedging the fluctuations in crypto-asset prices. The entire company’s portfolio had naked exposure to the market”, Stone said in a Twitter post, explaining his timeline with Celsius alongside his decision to take legal action.

Stone managed billions of dollars in crypto-asset investments for Celsius, and for most of that time “the parties operated without any formal written agreement, recognizing instead that they were engaged in an enterprise for mutual benefit… based on mutual respect and trust”, the lawsuit reads.

The lawsuit also states that Celsius has been using customer bitcoin (BTC) deposits to inflate its own crypto-asset, Celsius token (CEL). The CEL tokens were used as interest payments for customer deposits rather than liquid tokens or currencies.

This isn’t the first time a threat to sue the company has occurred. In June, crypto YouTuber Ben Armstrong claimed he would pursue legal action against the company.

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Updated: 07/08/2022 — 13:00