Celsius sues KeyFi for tens of millions

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Key points to remember

  • Celsius is hitting KeyFi with a lawsuit, arguing that the DeFi strategy firm is responsible for losing tens of millions of dollars from Celsius.
  • According to Celsius, KeyFi was “unable to deploy coins profitably” and stole large sums from the crypto lender.
  • KeyFi claims it was defrauded by Celsius, not the other way around.

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Celsius accuses KeyFi of stealing and mismanaging funds during their former partnership.

“Several tens of millions” in cryptocurrencies

Celsius counter-suits his former partner.

The Struggling Crypto Lending Company deposit a lawsuit today against decentralized finance (DeFi) strategy firm KeyFi and its CEO Jason Stone, claiming that KeyFi’s “incompetence, deception and conversion” were responsible for Celsius losing millions of dollars during of their previous partnership. The costume arrives a month after KeyFi accused Celsius for defrauding him.

Celsius said in court documents that KeyFi stole tens of millions of dollars in cryptocurrency from Celsius wallets, used Celsius funds to purchase hundreds of NFTs as well as “numerous blockchain-related companies,” and laundered coins stolen through Tornado Cash privacy software.

The crypto lender further claimed that while Stone billed itself as a “pioneer” in DeFi instruments early in the two companies’ partnership, it proved “unable to deploy coins profitably,” which resulted in additional losses of “several tens of millions of dollars” for the company.

A legal representative of Stone replied to the lawsuit on Twitter stating that “the compensation KeyFi received (including in the form of NFT) was expressly authorized by Celsius CEO Alexander Mashinsky” and that the lawsuit was “an attempt to rewrite history and to use KeyFi and Mr. Stone as a scapegoat for [Celsius’] organizational incompetence.

Once a leading crypto lending company, Celsius suspended customer fund withdrawals on June 13, citing “extreme market conditions,” and has since filed for bankruptcy. Recent reports claim Mashinsky reportedly used client funds to trade hundreds of millions of dollars worth of Bitcoin, wiping out experienced traders with decades of experience and suffering a $50 million trading loss in January 2022 alone.

Disclosure: At the time of writing this article, the author of this article owned ETH and several other cryptocurrencies.

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