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On Tuesday, insolvent cryptocurrency lender Celsius countersued decentralized finance (DeFi) protocol KeyFi and its CEO Jason Stone in the United States Bankruptcy Court, claiming Stone had falsely represented himself as an authority on the subject and that Stone and KeyFi had misappropriated Celsius coins. A few weeks prior, KeyFi had filed a lawsuit against Celsius alleging that the latter had broken a profit-sharing agreement.
KeyFi offered Celsius DeFi strategy and staking services. The defendants are accused in the Celsius lawsuit of stealing millions of dollars' worth of coins from Celsius wallets. The defendants allegedly purchased nonfungible tokens (NFTs) with Celsius currencies without the company's consent, transferred them to their personal wallets, and later sold some of them for "seven figure returns (which they pocketed)." Additionally, the defendants are accused of using Celsius coins to invest in other cryptocurrency businesses while concealing their activities by using Tornado Cash, a crypto privacy protocol that was recently outlawed by the US Treasury Department.
Celsius In the lawsuit, KeyFi was a co-plaintiff. KeyFi operated inside a special purpose vehicle that belonged to Celsius. The plaintiffs asserted that due to the defendants' egregious conduct and presumably as a result of the converted assets, they had lost "several tens of millions of dollars." They also asserted that KeyFi made baseless accusations against Celsius and neglected to repay payments when asked to do so. They tweeted about this:
The complaint and Twitter thread "produced dramatic media reports boosting Stone's bogus story, as Stone evidently intended."
On July 7, KeyFi filed a lawsuit against Celsius, stating that Celsius had broken a "handshake agreement" to split earnings following KeyFi's staking and DeFi's planning activities. KeyFi stated that Celsius ran a Ponzi scheme and the agreement was worth millions of dollars. When KeyFi sued Celsius, it was purportedly bankrupt and had already stopped accepting withdrawals as of June 13. A week later, Celsius filed for bankruptcy.
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