Bankrupt Celsius Launches Lawsuit Over Alleged Theft of 1000 ETH

Bankrupt Celsius Launches Lawsuit Over Alleged Theft of 1000 ETH
Bankrupt Celsius Launches Lawsuit Over Alleged Theft of 1000 ETH

Bankrupt crypto lender Celsius has filed an lawsuit against a former investment manger, alleging that he caused the platform tens to millions of dollars through incompetence and theft.

The complaint, which was filed in New York’s Manhattan bankruptcy court on August 23, alleges that Jason Stone, through his company KeyFi Inc, falsely presented himself as an experienced and highly skilled digital asset manager, but was in fact negligent and “extraordinarily inept” at devising and implementing profitable crypto investing strategies.

Celsius alleges DeFi Manager used NFTs, Tornado cash to Siphon Funds

The filing states that Stone worked with Celsius for about seven months up to March 2021 and was given access to a Celsius-controlled wallet for the purposes of managing the lender’s DeFi investing strategy.

Celsius alleges that rather than managing its assets as requested, Stone instead invested heavily in NFTs – including CryptoPunks and Bullrun Babes – to the tune of 1070 ETH. Allegedly, Stone later sold some of the NFTs for 1071 ETH before funnelling the funds through crypto mixing service Tornado Cash to his own private wallet rather than back into the Celsius-controlled wallet.

Celsius claims Stone did not have authorization to purchase NFTs in his role. He suggests that he did so because Celsius was unable to track NFT purchases through its internal systems. This makes the theft harder to spot.

In addition to what it claims was intentional theft, Celsius claims Stone also cost the lender over US$50 million through his ineptitude, saying he proved himself “incapable” of investing profitably in cryptocurrencies.

Stone responded to these accusations through Kyle Roche, his lawyer. He claims that all of the investments he made for Celsius were authorized by Alex Mashinsky, the lender’s CEO.

Claims – Previous suit from KeyFi Against Celsius

These complaints were filed six weeks after Stone’s company KeyFi sued Celsius alleging it was operating a Ponzi scheme, and that it owed Stone hundreds to millions in unpaid compensation.

Stone claims Celsius ran dry because it relied too heavily on new customers and offered high rates of return. It also failed to properly manage risk by hedging investments. He also says he generated over US$800 million in profit in seven months for the lender, further claiming that he’s entitled to 20 percent of this profit – over US$200 million.

Circle filed financial documents last week as part its bankruptcy hearing. They show that the lender has a US$2billion hole in its books , and could run out of cash before the end of October.

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