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A new lawsuit alleges that embattled crypto platform Celsius is a Ponzi scheme.
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Jason Stone, the CEO of a firm Celsius acquired, says it failed to hedge risk and manipulated the market.
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The suit comes after Celsius stopped allowing users to withdraw their holdings.
A former investment manager at Celsius is suing the bankrupt crypto lending platform, alleging it committed fraud and calling it a Ponzi scheme.
Jason Stone, the CEO and co-founder of the Defi firm KeyFi, later Celsius acquired in 2020, filed the complaint in New York on Thursday. His team was tasked with receiving “hundreds of millions of dollars of customer deposits” from Celsius to invest — but the acquisition came with no formal written agreement, according to the lawsuit.
Stone accuses Celsius of lacking basic security and risk management systems in place, and says the firm now owes money to his company and hundreds of thousands of customers.
Celsius did not immediately respond to a request for comment.
Celsius offered users interest in exchange for their crypto holdings that it then lent out to others. According to the lawsuit, it also used those customers’ holdings to artificially raise the price of its own coin, the “Celsius token” or CEL, and failed to account for certain payments that it owed to its users, resulting in a $200 million hole.
The platform viewed those funds as its property, the lawsuit alleges, as is…
