Celsius Network Being Sued for Breach of Contract

Celsius Network Being Sued for Breach of Contract

Jason Stone, the founder of KeyFi, is suing Celsius Network for breach of contract for failing to hedge the DeFi activity KeyFi was managing for Celsius from August 2020 to April 2021.

The lawsuit, which was conditionally filed July 7 in New York County, contends that Celsius “deceived” Stone about hedging transactions throughout 2020 and 2021, which “exposed” users to “potentially billions of dollars in losses.”

“Given the public speculation about the company’s solvency, and my observation of Celsius’ loose relationship with the truth, I feel it is only prudent to finally set the record straight,” said Stone, who detailed his reasoning and shared the lawsuit in a Twitter thread Thursday.

Celsius users have had their assets frozen on the cryptocurrency lending platform since June 12 — a move Stone alleges that Celsius made because “it did not (and still does not) have enough crypto-assets on hand to balance the obligations it owes to its clients.”

Stone also details an alleged scheme by Celsius to “artificially inflate” the price of CEL, the company’s token, by buying CEL with 4,500 BTC of customer deposits. He also said Celsius CEO Alex Mashinsky used the NFTs in the 0xb1 wallet for "his own personal benefit," transferring "valuable NFTs from the 0xb1 accounts to his wife’s wallet." In December of 2021, the 0xb1 wallet bought a Mega Mutant Serum for 999 ETH. It also purchased a Mega Mutant for 350 ETH in August — an NFT that moved wallets 10 days ago.

In May of 2021, two months after Stone left Celsius due to an alleged lack of compensation — which he's suing for along with damages — and concerns about the company being a “Ponzi scheme,” Stone said Celsius and CEO Alex Mashinsky continued to market itself as a “well-capitalized business.”

During the run-up, Stone alleges that Celsius “failed to update its ledger in order to reflect the increased dollar value of its liabilities.” The error left a “$100-$200 million hole in the balance sheet” that Celsius tried to fill with more customer assets, documents show.

Disclaimer: The author or members of the Lucky Trader staff may own NFTs discussed in this post. Furthermore, the information contained on this website or the Lucky Trader mobile application is not intended as, and shall not be understood or construed as financial advice.

Related Articles

Related News

Related Articles
View All
Related News
View All
© 2022 Lucky Ducks, Inc