Celsius Network has been hit with a lawsuit from one of its ex-employees. This comes moments after the company paid its entire Bitcoin loan. The person in question is Jason Stone, the founder, and CEO of KeyFi Inc. The lawsuit, filed in New York, accuses Celsius Network of market manipulation.
According to a Tweet posted by Stone,
“…in late Feb 2021, we discovered Celsius had lied to us. They had not been hedging our activities, nor had they been hedging the fluctuations in cryptoasset prices. The entire company’s portfolio had naked exposure to the market.”
Stone says that he led the management of the 0xb1 wallet address. He says that the 0xb1 address was created in 2020. It was made so Celsius Network could send customer deposits for KeyFi to manage.
Stone and his firm cut ties with Celsius in March of 2021. During the departure, Celsius allegedly suffered an impermanent loss.
According to Stone,
“By the time Celsius and KeyFi parted ways, we were managing nearly $2 billion of assets.”
According to the lawsuit, Celsius incurred a debt of $200 million due to improper accounting. Moreover, it says that Celsius had no idea how or why it happened.
Moreover, Stone alleges that the network owes KeyFi a significant sum.
Furthermore, the lawsuit states no written agreement between KeyFi and Celsius. This leads to speculation if there is any ground regarding the accusations. Stone’s lawsuit against the company could be a way to make a quick buck. Moreover, there is no official reply from Celsius. This makes the situation a little dicey.
What is Celsius up to?
It has recently come to light that Celsius transferred nearly 25,000 wrapped Bitcoin (wBTC) to FTX. The value of the tokens is around $528 million. Consequently, the move has concerned many investors. Some fear this will lead to significant dumping of BTC in the market. On the other hand, some also hope the firm will swap the wBTC for BTC. This will allow customers to withdraw their money.
Nonetheless, the firm has kept mum about the transfer. Furthermore, there is no official word from the CEO about the move.
The transfer of the wrapped Bitcoin could also motivate the lawsuit. Much of the situation is purely speculation. There is little clarity on the matter. The lack of any formal written agreement further obscures reality. However, we should expect additional information soon.
This crypto winter sure is one of the coldest. Many crypto firms have found themselves in a challenging hole to climb out of. Regardless, this crash has been a learning lesson for all.