Celsius can’t seem to escape the news cycle as the former head of its key investment strategy has alleged in a lawsuit that the company was operating as a “Ponzi scheme”.
The CEO of KeyFi, a decentralized finance investment business and former partner with Celsius, Jason Stone, stated that Celsius engaged in reckless mismanagement causing huge liabilities which they then used customer deposits to cover. Stone also stated that Celsius had failed to take measures to hedge against volatility, leaving it very exposed to the recent crypto meltdown.
“The unfortunate events that have publicly unfolded in recent weeks show that … Celsius grossly mismanaged its customer funds, failed to perform basic internal auditing to account for its obligations, and manipulated crypto-assets to the benefit of itself and its principals,” the suit claimed.
According to the 30 page complaint filed by KeyFi, as a result of Celsius’ Negligence stone had been cheated out of hundreds of millions of dollars, breaking off his relationship with the firm back in 2021 after realizing how poorly managed its portfolio was.
Another claim in the suit stated “As customers sought to withdraw their ether deposits, Celsius was forced to buy ether in the open market at historically high prices, suffering heavy losses. Faced with a liquidity crisis, Celsius began to offer double-digit interest rates in order to lure new depositors, whose funds were used to repay earlier depositors and creditors…. Thus, while Celsius continued to market itself as a transparent and well capitalized business, in reality, it had become a Ponzi scheme.”