Celsius lawsuit claims KeyFi stole customer deposits to buy NFTs

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Celsius is launching a lawsuit against DeFi aggregator KeyFi and its CEO Jason Stone, claiming that they lied to the public, lost or stole tens of millions of dollars in crypto, and ran off with a wad of NFTs. 

Yesterday’s lawsuit states that to make up for the damages, KeyFi must return every stolen crypto asset to Celsius while also compensating the crypto lender in a way that’s proportionate to its “flagrant, and indeed, criminal, misconduct.”

Celsius claims that Stone misled the company into believing he was a pioneer of coin staking and decentralized finance investment.

The lawsuit states, “Unfortunately, [Stone and KeyFi] proved themselves incapable of deploying coins profitably, and appear to have lost thousands of Celsius coins through their gross mismanagement,” (our emphasis).

This gross management is said to have lost Celsius tens of millions of dollars worth of crypto. In addition to this, Celsius claims that KeyFi stole tens of millions of dollars worth of its coins by transferring them into its own wallets. 

“Stone’s repeated assurances that he could, and would, return all of Celsius’ coins … were lies designed to conceal the fact that he either had lost or stolen a substantial number of coins.”

KeyFi then allegedly used this crypto to buy hundreds of non-fungible tokens (NFTs) to keep for itself. In one instance, it’s claimed that KeyFi pocketed upwards of seven-figure sums selling these stolen assets.

“The Defendants were not just incompetent, they also were thieves,” states the suit.

Read more: Looks like Celsius Network is up for sale — but is it worth it?

Finally, Celsius alleges that KeyFi, “laundered millions of dollars of Celsius property (or its proceeds) through Tornado Cash on dozens of occasions.” Tornado Cash is a crypto mixer popular with privacy advocates and criminals looking to launder their crypto.

KeyFi already suing Celsius

KeyFi initially sued Celsius in July. It accused the company of manipulating crypto markets, operating as a Ponzi scheme, and making basic accounting errors resulting in a $200 million loss. Both sides insist the other is lying.

Read more: Personal ties between CDPQ and Celsius “no real conflict of interest”

Celsius says, “The story spun by KeyFi in its complaint and by Stone on Twitter is a fantasy. In reality, and as Celsius can readily prove, defendants are liable to Celsius in staggering sums based on their incompetence, conversion, false representations, and other breaches of duty.” 

While representatives of KeyFi told Law360 that Celsius’ recent filing, “is an attempt to rewrite history and use KeyFi and Mr. Stone as a scapegoat for their organizational incompetence.”

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