More trouble for Celsius: the company gets accused of market manipulation and fraud

The scandalous cryptocurrency lending company Celsius has been accused of fraud. In particular, the service is blamed for market manipulation and lack of basic controls to protect customer accounts. The lawsuit was filed by the company’s former partner, software firm KeyFi. What is this — a stab in the back or a valid claim? Here’s what we know about it. 

According to the plaintiff, Celsius used a Ponzi schemea financial pyramid scheme, attracting new investors with high-interest rates to return funds to previous investors and creditors. The lawsuit, filed July 7, also said that Celsius refused to honor contractual duties that required KeyFi to receive a percentage of Celsius’ profits. 

The document does not have a specific figure due to the plaintiff but notes that the amount is “millions of dollars” and that the companies have agreed to profit shares ranging from 7.5% to 20%, depending on their investment strategy. 

It is reported that the amount of damages will be determined in a jury trial. Celsius has 20 days to respond to the New York State Supreme Court. Failure or lack of response to the lawsuit will result in a default judgment against the creditor, the statement said. 

KeyFi CEO Jason Stone, who worked for Celsius without a written agreement, claims to have brought Celsius and KeyFi about $838 million from August 2020 to March 2021. KeyFi terminated its partnership with Celsius in March 2021, and since then, Stone has tried through out-of-court litigation to obtain compensation for the firm.

Earlier, Celsius laid off a quarter of its staff because of “extreme market conditions” and halted. As for the charges, Celsius did not comment on the lawsuit at the time of writing.