Celsius crypto network was a Ponzi scheme says former manager

Beleaguered crypto lender Celsius Network operated as a classic “Ponzi scheme,” the former head of the company’s key investment strategy alleged in a lawsuit, claiming the company used customer deposits to cover huge liabilities caused by reckless mismanagement.

Jason Stone, whose company KeyFi partnered with Celsius to run its decentralized finance investment business in 2020 and 2021, said in the suit that the crypto lender failed to take steps to hedge against volatility, leaving it massively exposed to the recent crypto market collapse.

The suit said Celsius never maintained sufficient liquidity to cover its deposits in the event of a major market fall and that it used customers’ assets to prop up its own CEL coin and to pay out earlier depositors.

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“The unfortunate events that have publicly unfolded in recent weeks show that … Celsius grossly mismanaged its customer funds, failed to perform basic internal auditing to account for its obligations, and manipulated crypto-assets to the benefit of itself and its principals,” the suit claimed.



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