Celsius Countersues KeyFi  – Mismanagement And Theft Were Rampant

Celsius countersues Keyfi, after the staking software company and former Celsius partner, sued Celsius, earlier this summer, for manipulation of user money, breach of contract, and fraud. The court still hasn’t given out its verdict.

In an unusual turn of events, the crypto lender has retaliated with its own complaint, claiming KeyFi of utilizing Celsius money for unapproved business transactions, blatant theft, and “gross ineptitude.”

After KeyFi’s lawsuit, Celsius countersues KeyFi, as relations between the two sour.

Gross Mismanagement Was Alleged

According to the return lawsuit, the two former parties’ business connection began in 2020, when Jason Stone, the CEO of KeyFi, reportedly positioned himself as a pioneer in coin staking and DeFi in order to acquire access to Celsius money. However, according to the crypto lender, things swiftly went south.

“Unfortunately, Defendants Stone and KeyFi, Stone’s majority-owned corporate vehicle, proved themselves incapable of deploying coins profitably, and appear to have lost thousands of Celsius coins through their gross mismanagement. But the Defendants were not just incompetent, they also were thieves.”

Outright Theft Accusations

According to Celsius, KeyFi stole millions of dollars in corporate assets and processed them through Tornado Cash in order to conceal future interactions with the money.

When questioned about the use of Celsius money, KeyFi allegedly declined to correctly report on its commercial operations, potentially exposing the company to unanticipated liabilities. Furthermore, the paper reveals that KeyFi appears to have offered Celsius an amicable return of all monies – plus the latter’s portion of earnings – a promise that did not materialize.

The dangerous investments alluded to include, but are not limited to, NFTs, which KeyFi was prohibited from purchasing using Celsius assets.

Unauthorized NFT Purchases

A fundamental allegation in the case brought by Celsius and Celsius KeyFi LLC – a subsidiary formed as a result of the two former partners’ partnership – is the use of Celsius funds that were to be used in DeFi and staking projects. These funds were intended to be used to acquire hundreds of NFTs from collections such as CryptoPunks and Bullrun Babes, among others.

According to the paper, the transactions were approved by KeyFi leadership despite an agreement between the parties that prohibited the use of Celsius assets to acquire NFTs. Furthermore, a handful of these NFTs were allegedly sold later, earning Celsius “seven-figure profits (which they pocketed).”

Although this lawsuit may be nothing more than a crazy endeavor to get funding to assist Celsius return from bankruptcy, it is up to the courts to determine if the claims are true or only a response to the prior one.

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