KeyFi is being sued by Celsius for financial incompetence

Tuesday, the troubled cryptocurrency loan platform Celsius filed a countersuit against Jason Stone and his firm KeyFi in the United States Bankruptcy Court. In the complaint, Celsius asserts that Stone misrepresented himself as a pioneer and specialist in currency staking and decentralized finance (DeFi) investments.

“Unfortunately, Defendants Stone and KeyFi, Stone’s majority-owned corporate vehicle, were unable to successfully deploy coins and seem to have lost thousands of Celsius coins due to egregious mismanagement,” claims Celsius. “However, the Defendants were not only stupid but were thieves.”

The Celsius countersuit argues that Stone and KeyFi transferred millions of dollars worth of coins from Celsius-controlled wallets to their own wallets. The lawsuit also says that Stone purchased hundreds of NFTs using Celsius currencies and sent them to their own wallets.

Non-fungible tokens, or NFTs, are cryptographically unique tokens that provide evidence of ownership for digital (and occasionally physical) material.

Stone and/or KeyFi seem to have used Celsius coins to buy stakes in a number of blockchain-related firms and platforms, which they continue to possess illegally, according to the counterclaim.

Stone, whose KeyFi was bought by Celsius in 2020, filed a lawsuit against Celsius in July 2020 for allegedly refusing to respect the agreement. In the case, KeyFi argues that Celsius exploited client money to “manipulate crypto asset markets, failed to implement fundamental accounting controls that put these deposits at risk, and failed to fulfill its obligations.”

In the same month, Celsius filed for Chapter 11 bankruptcy protection, one month after ceasing all client withdrawals and swaps, alleging liquidity difficulties that prompted authorities in Alabama, Kentucky, New Jersey, Texas, and Washington to launch investigations.

Celsius further says that Stone used the authorized Tornado Cash mixing service to conceal the origin, destination, and counterparties of his transactions. In September 2021, Stone allegedly wired $1.4 million using Tornado Cash.

In the counterclaim, Celsius requested that the court grant numerous demands, including the return of “withheld property” that may have gotten into the hands of the defendants. Damages are awarded, including for what Celsius describes as “[KeyFi and Stone’s] intentional and malicious behavior.”

celsius network cryptocurrency news keyfi