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- A former employer had filed a lawsuit against Celsius for running a Ponzi scheme.
- The employer had put allegations of crypto market manipulation on Celsius.
- Celsius recently halted withdrawals due to uncertainties in the market.
A former employer has alleged Celsius of running a Ponzi Scheme that resulted in customers losing access to their wallets. Jason Stone, a former investment manager of Celsius, through his firm, KeyFi has made these claims. As per the claims, the lending platform was involved in crypto market manipulation. That too without the implementation of basic accounting measures to protect customer deposits.
The lawsuit alleged that the company was rigging the price of CEL, its native token and thus, generating profit. Celsius is also accused of using a customer’s Bitcoin deposits to inflate CEL.
Stone in the lawsuit says Celsius lied to them. Moreover, the lawsuit alleges Celsius of not hedging their activities or the volatility in crypto asset prices. The whole market had a complete exposure of the company’s portfolio. Celsius are given 20 days to respond to the allegations. Moreover, the lawsuit alleges not having enough assets to cover withdrawals.Celsius’ lack of security controls for the protection of billions of dollars in customers’ funds led to the depreciation of the relationship between the platform and Stone.
There was no organized investment strategy in Celsius before hiring Stone, according to the lawsuit. The company was instead looking for a potential investment that could make them more money that they own to their depositors.
It is also interesting to note Celisus, before the lawsuit, was marketed as a platform that was less risky. However, it has emerged to be a platform with more risk than a conventional bank. The lawsuit adds on to the troubles of Celsius. The lending protocol announced that it had stopped withdrawals due to the uncertainties of the crypto market.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
