KeyFi CEO sues Celsius on grounds of ‘failing to uphold the contract’ and more

ambcrypto.com:

Jason Stone, a DeFi entrepreneur and the CEO of KeyFi, Inc., one of the people behind the yield farming account 0xb1, is suing cryptocurrency loan company Celsius for allegedly failing to uphold its contract. Stone is asking for unspecified damages and has decided to go forward with a trial.

KeyFi claims that Celsius exploited customer funds to “manipulate crypto-asset markets, had failed to adopt fundamental accounting controls which risked those same deposits and had failed to execute through on commitments” in the complaint filed in New York on 7 July.

Celsius disregarded a “handshake agreement” as per the complaint submitted on 7 July. Celsius has to share a percentage of its profits with KeyFi for using the latter’s DeFi tactics. Additionally, the court charged Celsius with “negligent misrepresentation” regarding its risk management procedures. It has also been charged with “fraud in the inducement” due to false statements made about its business practices. KeyFi claimed these statements were made with the sole purpose of partnering with them.

According to court documents, KeyFi served as an investment manager from August 2020 to March 2021 for Celsius. A Memorandum of Understanding (MOU) was also signed at that time by the two companies. This required KeyFi to operate as Celsius KeyFi, a special-purpose vehicle that will be owned by Celsius.

In a significant portion of the case, it is also alleged that Celsius operated in a “Ponzi” scheme. The organization recruited new depositors with high-interest rates to “repay former depositors and creditors.”

— Dylan LeClair