Earlier this summer, KeyFi (a staking software company and former partners Celsius) sued Celsius for fraud, mismanagement of customer deposits, and failure to honor an agreement between the two factions. This case has not yet been resolved by the court till date. In an interesting turn of events, Celsius has responded with its own lawsuits, accusing KeyFi of using its funds for unauthorized dealings, outright theft and gross incompetence.


The revenge lawsuit claims that the business relationship between the two former partners started in 2020 when the CEO of KeyFi – Jason Stone – allegedly represented himself as a pioneer in DeFi and coin staking, in a ploy to gain access to Celsius funds. However, according to Celsius, things went south very quickly.


Celsius stated that Keyfi misappropriated millions of dollars worth of company assets and processed them through Tornado Cash in order to hide future dealings with the stolen funds. The risky business dealings hinted at but are not limited to NFTs which KeyFi was forbidden to acquire using Celsius assets.


When questioned on their mismanagement of Celsius funds, KeyFi refused to accurately report their business dealings, opening up the company to unforeseen liabilities. Furthermore, the document indicates that KeyFi appeared to have promised Celsius the return of all funds and assets including Celsius’ share of the profits amicably. However, that promise was never kept.


In the lawsuit filed by Celsius and Celsius KeyFi LLC (a subsidiary created due to the partnership between the two companies), a key complaint is the use of Celsius funds that were to be deployed in staking ventures and DeFi. These assets were meant to be used to purchase NFTs belonging to lucrative collections such as CryptoPunks and Bullrun Babes.


The document hints that the purchases were sanctioned by KeyFi in spite of an agreement between the parties that clearly forbade the use of Celsius assets to purchase NFTs. Furthermore, some of these NFTs were sold, allegedly bringing in Celsius seven-figure returns which KeyFi pocketed. Although this lawsuit could be a wild bid to secure funds to help Celsius to recover from insolvency, it is up to the law to decide if the allegations are true or if it is just a response to the previous lawsuit.


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