The CEO of KeyFi claims that Celsius failed to honor a "handshake agreement" and used customer funds to manipulate markets.
KeyFi, a Vancouver-based investment firm founded in 2020, has recently filed a lawsuit against the crypto-lending company Celsius, indicating that the latter ran a Ponzi-style scheme and made use of customers’ deposits to alter the price of its native crypto token.
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According to the official announcement issued on July 7th, Jason Stone, CEO of KeyFi and former investment manager at Celsius, noted that the company didn’t hold its end of the bargain. As stated by KeyFi, Celsius had to ensure that any changes in KeyFi's token value relating to its investment operations would be minimized. He added:
“They had not been hedging our activities, nor had they been hedging the fluctuations in cryptoasset prices. The entire company’s portfolio had naked exposure to the market.”
On top of that, KeyFi CEO mentioned that Celsius refused to honor a “handshake agreement,” which saw the investment company receiving varying percentages of the income produced on Celsius's behalf. On top of that, Celsius wasn't allegedly successful in instituting “basic accounting controls which endangered” deposits of customers' funds.
In fact, Stone has recently taken to Twitter and revealed himself as the leader behind a yield farming account dubbed oxb1, laying down the whole story of the “partnership” between KeyFi and Celsius:
Oxb1 mentioned that KeyFi initially chose to end the collaboration and progressively unwind its investment holdings. According to the decentralized finance (DeFi) entrepreneur Stone, Celsius now owes KeyFi “a significant sum of money,” which the company will seek to retrieve by going to court.
The accusations arrived after Celsius halted all withdrawals on June 12th, with the exact date of the restart yet to be announced. Earlier this year, Celsius hired restructuring lawyers to get some advice on its financial problems, while a few weeks later, the crypto exchange also enrolled additional advisers, a move indicating that the firm might go bankrupt.
