A lawsuit filed by the former head of DeFi at Celsius alleges that the cryptocurrency lender was operating a Ponzi scheme.
What Happened: According to a filing with the Supreme Court of New York, the lawsuit claims that Celsius was “desperately seeking a potential investment that could earn them more than they owed to their depositors.”
The complaint was filed by DeFi asset management platform KeyFi which was partially acquired by Celsius in 2020.
“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,” wrote KeyFi CEO Jason Stone on Twitter.
Despite our reasonableness, and due to what I believe was motivated by the massive hole in their balance sheet, Celsius has refused to acknowledge the truth or their failures in risk management and accounting. They have tried to deflect blame to me instead.— 0xb1 (@0x_b1) July 7, 2022
Why It Matters: Celsius has been the target of public scrutiny after the platform froze withdrawals in light of a liquidity crisis. The company said it was exploring all options to resolve the issue.
On Thursday, Benzinga reported that Celsius has managed to repay $183 million in collateralized debt to DeFi platform Maker MKR/USD, taking its liquidation price down to $0.00. The firm will now be able to retrieve its collateralized Bitcoin BTC/USD.
Price Action: According to data from Benzinga Pro, BTC was trading at $21,954 at press time, gaining 7.6% over 24 hours.
Photo via FellowNeko on Shutterstock
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