Celsius Counter-Sues KeyFi for Tens of Millions

Crypto lending firm Celsius claims that KeyFi CEO Jason Stone cost the company tens of millions of dollars through theft and incompetence.

Celsius Counter-Sues KeyFi for Tens of Millions
Celsius CEO Alex Mashinksy (Photo by Dania Maxwell/Bloomberg)

Key Takeaways

  • Celsius is hitting KeyFi with a lawsuit, arguing that the DeFi strategy firm is responsible for Celsius losing tens of millions of dollars.
  • According to Celsius, KeyFi was “incapable of deploying coins profitably” and stole large sums from the crypto lender.
  • KeyFi claims that it was defrauded by Celsius, not the other way around.

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Celsius is accusing KeyFi of stealing and mismanaging funds during their former partnership.

“Many Tens of Millions” in Cryptocurrencies

Celsius is counter-suing its former partner.

The struggling crypto lending company filed a lawsuit today against decentralized finance (DeFi) strategy firm KeyFi and its CEO Jason Stone, claiming that KeyFi’s “incompetence, deceit and conversion” was responsible for Celsius losing millions of dollars during their previous partnership. The suit comes a month after KeyFi accused Celsius of defrauding it.

Celsius stated in court documents that KeyFi stole tens of millions of dollars in cryptocurrencies from Celsius wallets, used Celsius funds to buy hundreds of NFTs as well as “numerous blockchain-related companies,” and laundered the stolen coins through privacy software Tornado Cash. 

The crypto lender further claimed that, while Stone presented himself as a “pioneer” in DeFi instruments at the beginning of the two companies’ partnership, he proved himself “incapable of deploying coins profitably” which resulted in additional losses of “many tens of millions of dollars” for the firm. 

A legal representative for Stone responded to the lawsuit on Twitter by stating that “the compensation that KeyFi received (including in the form of NFTs) was expressly authorized by Celsius’s CEO Alexander Mashinsky” and that the suit was “an attempt to rewrite history and use KeyFi and Mr. Stone as a scapegoat for [Celsius’] organizational incompetence.”

Once a leading crypto lending company, Celsius paused customer fund withdrawals on June 13, citing “extreme market conditions,” and has since then filed for bankruptcy. Recent reports claim Mashinsky allegedly used customer funds to trade hundreds of millions of dollars worth of Bitcoin, overruling senior traders with decades of experience and suffering a $50 million trading loss in January 2022 alone.

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.

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