KeyFi, a staking platform firm and former partner of Celsius, sued Celsius earlier this summer for mismanagement of customer deposits and fraud and failing to honor an agreement between them. The court has yet to resolve this case.
In an interesting twist of events, KeyFi filed a lawsuit against the crypto lender, accusing it of using Celsius funds to conduct unauthorized business transactions, theft, and “gross negligence.”
In the return lawsuit, it is claimed that the business relationship between the former parties started in 2020 when Jason Stone, the CEO of KeyFi, allegedly represented himself to be a pioneer in coin staking. According to the crypto lender, however, things turned sour quickly.
“Unfortunately, Defendants Stone, KeyFi, Stone’s majority-owned corporate vehicle proved incapable of deploying coins profitably and appear to be responsible for the loss of thousands of Celsius coins due to their gross mismanagement. The Defendants weren’t just incompetent; they were also thieves.
Outright Theft: ccusations
Celsius claims that millions of dollars of company assets were stolen by KeyFi, and then processed through Tornado Cash to hide future deals with these funds.
KeyFi allegedly refused to provide accurate information on the use of Celsius funds when asked about their business dealings. This opened up the firm for potential liabilities. The document also indicates that KeyFi promised Celsius all funds back, plus a share of the profits, which was not fulfilled.
These are the most risky investments, including but not limited to NFTs. KeyFi was prohibited from acquiring Celsius assets using NFTs.
Unauthorized NFT Purchases
Celsius KeyFi LLC and Celsius KeyFi LLC filed a lawsuit against each other. The suit was filed because Celsius funds were used in DeFi and staking ventures. These assets were used to buy hundreds of NFTs belonging to collections like CryptoPunks or Bullrun Babes.
According to the document, KeyFi leadership approved the purchase despite an agreement prohibiting the use Celsius assets for NFTs. A number of these NFTs were also later sold, allegedly earning them Celsius “seven-figure” returns.
This lawsuit could just be a wild attempt to get funds to help Celsius recover from bankruptcy. However, the courts will decide if the allegations are true or false.
CryptoPotato’s first post was entitled Celsius Responds to KeyFi Lawsuit with One of Its Own
Marla Brooks – Financial Analysis
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