Celsius countersues KeyFi, claiming deception and ineptitude caused tens of millions of dollars in damages

Celsius has launched an assault on former stake and DeFi strategic affiliate KeyFi and its CEO, who sued it a week before it declared bankruptcy.
Celsius countersues KeyFi, claiming deception and ineptitude resulted in tens of millions of dollars in damages.

Celsius, a bankrupt crypto lending company, countersued decentralized finance (DeFi) protocol KeyFi and its CEO Jason Stone in the United States Bankruptcy Court on Tuesday, claiming Stone misrepresented himself as an expert in DeFi and that Stone and KeyFi lost Celsius coins due to incompetence and deception. The claim was filed several weeks after KeyFi sued the company for allegedly failing to follow a profit-sharing agreement.

The company received staking services and DeFi technique from KeyFi. The defendants reportedly took millions of dollars in coins from Celsius wallets, according to the lawsuit. Furthermore, the company claims that the defendants purchased nonfungible tokens (NFTs) with the disputed coins without the company’s permission, moved them to their personal wallets, and then sold some for “seven figure profits (which they pocketed).” The defendants reportedly used the company coins to purchase shares in other crypto firms and utilized Tornado Cash, a crypto privacy protocol recently outlawed by the US Treasury Department, to conceal their operations.

Related: A US Trustee requests that an examiner investigate Celsius’ “serious transparency problems.”

Celsius & KeyFi was named as a co-plaintiff in the lawsuit. The company owned a special purpose vehicle in which KeyFi functioned. The plaintiffs claimed they lost “several tens of millions of dollars” as a result of the defendants’ gross negligence, as well as potentially tens of millions of dollars from converted assets. They also alleged that KeyFi did not refund payments when asked and filed bogus claims against the company, and they tweeted about it:

“The lawsuit and Twitter thread, as Stone evidently intended, created sensational media coverage repeating his false story.”

The company was sued by KeyFi on July 7 for failing to respect a “handshake agreement” to split revenues after KeyFi’s staking and DeFi strategic operations. Celsius and KeyFi said the transaction was worth millions of dollars.
When KeyFi sued the company, it had blocked withdrawals on June 13 and was supposedly bankrupt. Celsius declared bankruptcy a week later.

Celsius sues Prime Trust in court, claiming the company failed to turn over $17 million in cryptocurrency.

According to Celsius’ legal team, “Prime Trust was compelled under the Bankruptcy Code to release all property belonging to the company […] including these residual crypto assets.”

Related; Celsius sues Prime Trust in court, claiming the company failed to turn over $17 million in cryptocurrency.
Celsius Network, a cryptocurrency lending platform, has filed a lawsuit alleging that custodian Prime Trust failed to turn over around $17 million in bitcoin.

The company’s legal team filed a petition with the United States Bankruptcy Court for the Southern District of New York on Tuesday.

The company’s legal team filed a case against Prime Trust, stating that the business failed to refund $17 million in crypto assets after it ended its agreement with the loan firm in June 2021. According to, Prime Trust served as a crypto custodian for New York and Washington-based customers from 2020 to mid-2021, returning $119 million in crypto but keeping some funds: 398 Bitcoin (BTC), 3,740 Ether (ETH), 2,261,448 USD Coin (USDC), and 196,268 Celsius (CEL).

“At the start of these bankruptcy proceedings, Prime Trust was required by the Bankruptcy Code to surrender to Celsius any property belonging to Celsius that was in Prime Trust’s custody, including these remaining crypto assets, and should be directed to turn them over.”

“Turn them over today in accordance with Section 542 of the Bankruptcy Code,” the complaint stated. “Alternatively, Celsius demands specific fulfilment of certain contractual obligations requiring Prime Trust to deliver and transfer cryptocurrency assets to Celsius.”

The legal team also stated:

“For several months, the company attempted to persuade Prime Trust to uphold its duties and transfer identified Subject Property to Celsius.” Those efforts looked to be on the verge of being rewarded at times. However, Prime Trust continues to illegally withhold Subject Property that the company has authorized Prime Trust to disclose.”

Celsius filed for Chapter 11 bankruptcy in July after paying off obligations owing to Compound (COMP), Aave (AAVE), and Maker (MKR). On August 16, Cointelegraph claimed that the crypto lending company was on pace to make a profit.

“Turn them over today in accordance with Section 542 of the Bankruptcy Code,” the complaint stated. “Alternatively, Celsius demands specific fulfilment of certain contractual obligations requiring Prime Trust to deliver and transfer cryptocurrency assets to Celsius.”

On pace to run out of money by October, according to a study, the company’s debt was closer to $2.8 billion, as opposed to the $1.2 billion loss claimed in its bankruptcy application.

The company bankruptcy documents reveal a corporation in serious peril.
The aggregate value of the BTC, ETH, USDC, and CEL tokens Celsius claimed from Prime Trust was around $17.4 million at the time of publication. According to Cointelegraph, despite the bankruptcy proceedings, the price of Celsius’ CEL coin has risen more than 4,000% since June, reaching a three-month high of $3.86. However, the price has decreased by more than half since then, reaching $1.67 on Tuesday.