Get the weekly summary of crypto market analysis, news, and forecasts! This Week’s Summary The Crypto Market ends the week at a total market capitalization of $1,175 trillion. Bitcoin has increased by over 6% this week. Ethereum gained almost 17% over the past seven days. XRP is up by nearly 3% this past week. Almost all altcoins are trading in the green, with very few exceptions. The DeFi sector increased the total value protocols (TVL) to around $44 billion. Crypto…
Troubled crypto lending platform Celsius Network is facing fraud charges in a New York state court. Reuters reported this news on July 7, noting that KeyFi Inc brought these charges against the firm. Specifically, the plaintiff accuses Celsius of running a Ponzi scheme for personal gain.
KeyFi Inc, which is run by Jason Stone – a former Celsius investment manager – claims Celsius used customer deposits to rig the price of its native token, CEL. Citing “gross mismanagement of customer deposits,” the complaint alleges Celsius failed to properly hedge risk. This failure resulted in the platform freezing user funds.
Additionally, the plaintiff claims Celsius logged some deposits on its books on a US dollar basis despite paying customers in Bitcoin (BTC) and other tokens. As a result, this accounting flaw created a $100-$200 million hole that the company could not explain or resolve.
Per the filing, Stone and KeyFi integrated with Celsius mostly without written agreements. Stone claims he generated $838 million of profit for Celsius and KeyFi before costs and overhead from August 2020 to March 2021. Allegedly, KeyFi was entitled to a 20% cut of the net profit.
Stone said he walked out of the relationship with Celsius in March 2021 after realizing the hedging issues could ruin Celsius financially. According to him, Celsius’ financial ruin would have impacted KeyFi’s reputation. However, Celsius declined to acknowledge Stone’s resignation.
Filed in New York State Supreme Court, New York County, the lawsuit seeks unspecified compensatory and punitive damages.
Celsius Liquidity Woes Continue
This news comes after Celsius paused withdrawals, swaps, and transfers on June 13, citing extreme market conditions. Since then, the company has not managed to resume any of the halted services. However, Celsius continues calling on its customers to bear with it as its team works to find a solution.
In a June 30 blog post, Celsius said:
We continue to take important steps to preserve and protect assets and explore options available to us. These options include pursuing strategic transactions as well as a restructuring of our liabilities, among other avenues.
Meanwhile, CEL continues plunging even as the broader crypto market attempts a recovery. At the time of writing, Celsius Network (CEL) is changing hands at $0.7021 after plummeting 16.80% over the past 24 hours.