Celsius Is Accused Of Being A Ponzi Project

Celsius encountered FUD again when he was accused by his former partner of many acts of fraud and of a Ponzi scheme after having just experienced a “nearly” liquidation event.

As an updated Coincu News article, on the evening of July 7, Celsius paid off the Bitcoin loan from Maker Protocol by paying an additional $41.2M and reducing the liquidation price from $2722 to $0.

However, the unexpected action of this lending platform was to immediately withdraw 21,962 WBTC used as collateral when making a loan and pushed all of this WBTC onto the FTX exchange, with a high probability to release it to the market.

Celsius is A Ponzi project

Jason Stone, the head of KeyFi Inc., is the one who filed a lawsuit against Celsius in a New York court (USA). Mr. Stone stated that from August 2020 to April 2021, he and the KeyFi team managed 0xb1, an investment management unit that was acquired by Celsius to build monetization strategies in the crypto.

Stone claims this lending company has deposited hundreds of millions of dollars in Celsius depositors’ crypto assets for KeyFi to invest. By April 2021, the amount that KeyFi holds instead of this lending platform is up to 2 billion USD.

Mr. Stone stated Celsius was committed to KeyFi to closely monitor investment activity and adopt hedging strategies to limit risk. However, by February 2021, KeyFi discovered that this lending company had not hedged KeyFi’s positions but even increased its exposure to the market to an alarming level.

After seeing that, Stone offered to end his relationship with Celsius and return the money. However, during the transaction, the money suffered a significant impermanent loss due to market volatility, but this lending platform accused KeyFi of embezzling the money and refusing to pay them as a partnership agreement. Despite spending more than a year in secret reconciliation, the two sides still could not find a common voice.

Since this company is currently facing liquidity difficulties, as well as the risk of bankruptcy, KeyFi decided to sue this company.

In the court filing, KeyFi also accused “ponzi scheme” through the following evidence:

The lawsuit also claims Celsius CEO Alex Mashinsky acted to embezzle users’ money after taking back assets from KeyFi for his own benefit.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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