KeyFi’s Jason Stone has filed a lawsuit against Celsius, alleging that it owes KeyFi “millions of dollars.” bring the action KeyFi and Jason Stone for mismanagement and theft of client funds.
The complaint describes KeyFi and Stone as follows:
“very incompetent at their investment strategy. ”
The legal complaint alleges that Stone was granted access to the private key of a Celsius-owned wallet called “0xb1.” This wallet existed to allow Stone to control her DeFi strategy for Celsius, according to terms agreed between the parties.
However, Celsius claims Stone misused the funds in February 2021 to purchase CryptoPunk, Bullrun Babes, and hundreds of other NFTs for a total of 1,070 ETH. Stone then sold four of his CryptoPunks for his 1,071 ETH before transferring ETH to Tornado Cash. Many of his NFTs purchased by Stone were said to have been moved from wallets owned by Celsius to wallets fully controlled by Stone.
Celsius claims that Stone did not have the authority to purchase NFTs with Celsius funds. The complaint also states that Stone may have done so because he “was aware that his NFT transfers in and out of Wallet were not visible to Celelia through his operational dashboards.”
The lawsuit indicates that Stone used a combination of NFT purchases and Tornado Cash to siphon funds from Celsius wallets without any internal warning.
Kyle Roche, founding partner of Roche Freedman, represent Stone replied that the NFT purchase was “approved by Celsius CEO Alexander Mashinsky.”
As KeyFi claims in its complaint filed last month, the compensation KeyFi received, including in the form of NFTs, was expressly authorized by Celsius CEO Alexander Masinsky.
— Kyle Roche (@KyleWRoche) August 23, 2022
After severing ties with Stone, Celsius withdrew funds from the 0xb1 wallet as Stone still had access to the private keys. However, Wallet said he received his DAI airdrop of $1.4 million in September 2021. This was allegedly stolen by Stone and laundered through Tornado Cash along with her additional 320 ETH.
In addition to the theft allegations, Celsius claims that Stone lost more than $50 million in Celsius funds in a poorly executed DeFi transaction “after the price of ETH plummeted.” The position was allegedly liquidated on February 23, 2021, the day Ethereum fell to $1,355 from his 24%, before recovering to $1,576 and dropping to 10%.
Among other complaints, Celsius also alleges Stone invested in NFT platform Nifty with Celsius-owned funds. Celsius claims he should be given a share of Nifty as part of the settlement.
Although the complaint does not specifically state that the funds Stone allegedly stole belonged to customers, Celsius “was focused on recovering balances for the benefit of its customers.” said.
This statement shows that it is in the customer’s interest to collect funds from 0xb1. While this information may refer to ensuring sufficient liquidity for Celsius to operate, the funds may have belonged to Celsius customers.
Celsius also filed a lawsuit against Prime Trust for about $17 million on Tuesday, so it looks like it’s trying to recover all the money it owes.