An individual who worked with Celsius Network filed a lawsuit against the platform, calling it a ponzi scheme.
Jason Stone is the CEO and founder of KeyFi, and said that he helped generate profit for the Celsius Network.
The lawsuit adds to the already deep trouble that Celsius Network is facing.
An individual previously associated with Celsius Network has sued the company, claiming that it was running a ponzi scheme. The lawsuit says that Jason Stone, CEO and founder of KeyFi, managed billions of dollars in crypto for Celsius Network. Stone reportedly generated hundreds of millions of dollars in profit in the form of transaction fees, rewards for staking tokens, and other appreciating assets.
The relationship between the two entities reportedly began to disintegrate when
“Stone discovered that not only did Defendants lack basic security controls to protect the billions of dollars in customers’ funds they held, but that they were actively using customer funds to manipulate crypto-asset markets to their benefit.”
It also claims that Celsius Network had no investment strategy other than lending out consumer deposits that they received. It then goes on to say,
“Instead, they were desperately seeking a potential investment that could earn them more than they owed to their depositors. Otherwise, they would have to use additional deposits to pay the interest owed on prior deposits, a classic ‘Ponzi scheme.’”
It even cites a particular incident that points to the lack of understanding on how to handle the funds. This example refers to a time when Celsius Network improperly accounted for payments owed to customers, which resulted in a $200 million liability “the company did not even understand how or why it owed.”
The development lands Celsius into more hot water, and it’s unclear how it will pan out for the company. Celsius Network is currently in an escalating spiral, which could prove to be the final nail in the coffin.
Celsius Network’s Troubles Deepen With Lawsuit
Celsius has been in much turmoil, considering financial restructuring to help deal with the situation. It has also laid off 25% of its workforce, which is about 150 staff members. Meanwhile, it has had to debunk rumors that its CEO has been attempting to flee the United States.
All of these incidents leave a poor forecast for the company. Others are waiting on the sidelines, eager to scoop up the assets that Celsius has.
However, Celsius Network has managed to clear its bitcoin loan, which reset its liquidation price to zero. This is one step in the path of resuming withdrawals, but there are still more actions to be taken.