Sunday, June 16, 2024

KeyFi sues Celsius over mismanagement of customer funds.

Celsius’ former asset manager KeyFi is suing the crypto lender for alleged mismanagement of customer funds. KeyFi also alleged that Celsius has not paid for its work. The crypto company is already drowning after a liquidity crisis and the collapse of Terra’s stablecoin.

According to the lawsuit, KeyFi managed around $2 billion in customer assets for Celsius via the popular oxb1 crypto address from August 2020 to March 2021. Jason Stone, CEO of KeyFi, said the two companies had a handshake deal with KeyFi to manage billions of dollars in customer crypto deposits in return for a share of the profits generated from those crypto deposits. However, there was no formal written agreement between KeyFi and Celsius.

Celsius, from August 2020, began transferring hundreds of millions of dollars in crypto assets to KeyFi. The company set up a wallet on the Ethereum blockchain referred to as oxb1. The lawsuit highlights this address as where Celsius sent assets for KeyFi to deploy. Both companies agreed to engage in crypto trading strategies that required an effective hedging strategy to manage risk and guard against price fluctuations of certain cryptocurrencies. The lawsuit claims that Celsius had a full view of what trading activities KeyFi were engaging in.

Stone said Celsius executives repeatedly assured him that the company had the necessary hedging transactions to ensure price fluctuations of certain crypto assets would not negatively hit the company. As such, KeyFi relied on these representations. Stone highlighted that these promises were lies as Celsius failed to implement basic risk management strategies. Stone claimed there were multiple incidents in which Celsius’ failure to perform basic accounting endangered customer funds.

Furthermore, the lawsuit sheds light on CEL – Celsius’ digital coin. KeyFi alleged that Celsius engaged in transactions to artificially inflate the price of CEL. The lawsuit stated that the purpose of the scheme was fraudulent and illegal. It says the company prompted customers to be paid in CEL by providing them with higher interest rates. Celsius, by purposefully and artificially inflating the price of CEL, was able to pay customers. Stone also alleged that as such, Alex Mashinshy – Celsius CEO, was able to enrich himself.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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