An ex-employee of Celsius Network, the cryptocurrency lending platform that recently suspended all transactions, this week accused the company of operating as a Ponzi scheme in a lawsuit.
Netizens were told they could earn interest on cryptocurrencies they put into Celsius. The biz generated that return by investing people’s funds in the cryptocurrency market. Celsius needed to make enough money on its trades to produce those interest fees. When the crypto market crashed last month, amid general economic uncertainty, Celsius froze all withdrawals, swaps, and transfers on its network.
Now, one of its former asset managers has alleged in a filing to the New York County Supreme Court that this all devolved into nothing more than a grubby, unsustainable Ponzi scheme. Jason Stone, the CEO and founder of KeyFi, who managed billions of dollars worth of cryptocurrency investments on behalf of Celsius from August 2020 to March 2021, said Celsius began to fall apart when the prices of digital assets, such as Ethereum and Bitcoin, soared at the start of last year.
At that point, Celsius’ customers started withdrawing their holdings to sell high and bank a fat profit. Celsius, however, allegedly did not have enough funds to cover these transactions, and was forced to buy cryptocurrencies at a loss to return people’s assets. In an attempt to attract new customers to inject more cryptocurrency to its platform,…
