{"id":247548,"date":"2022-07-08T16:52:46","date_gmt":"2022-07-08T15:52:46","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=247548"},"modified":"2022-07-08T16:52:46","modified_gmt":"2022-07-08T15:52:46","slug":"celsius-gets-sued-amidst-ponzi-scheme-allegations","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/celsius-gets-sued-amidst-ponzi-scheme-allegations\/","title":{"rendered":"Celsius gets sued amidst Ponzi scheme allegations"},"content":{"rendered":"

KeyFi Inc, a DeFi staking software developing firm, has filed<\/a> a lawsuit against embattled crypto lending company Celsius Network over allegations of fraud while also alleging that the firm operated in a Ponzi-like manner.<\/p>\n

Jason Stone, the CEO of KeyFi, revealed this in a long Twitter thread on July 7.<\/p>\n

KeyFI and Celsius agreement<\/h2>\n

According to Stone's thread, Celsius had refused to honor the terms of a 2020 agreement which saw KeyFi help the crypto lender manage and invest its customers' funds.<\/p>\n

A review of the court filing showed that KeyFi did not sign any formal written agreement with Celsius Network until January 2021. However, the firm had been operating as Celsius investment manager under a special purpose vehicle named Celsius KeyFi since August 2020.<\/p>\n

At the peak of this partnership, KeyFi was helping Celsius to manage as much as $2 billion of its users' funds, and the firm had over $800 million in assets under management as of April 2021.<\/p>\n

Celsius lied to KeyFI<\/h2>\n

Stone revealed that Celsius had lied to him in February 2021 about hedging the investment activities of KeyFI. According to him, he discovered that Celsius “had naked exposure to the market.”<\/p>\n

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But in late Feb 2021, we discovered Celsius had lied to us. They had not been hedging our activities, nor had they been hedging the fluctuations in cryptoasset prices. The entire company\u2019s portfolio had naked exposure to the market.<\/p>\n

— 0xb1 (@0x_b1) July 7, 2022<\/a><\/p><\/blockquote>\n