Ponzi scheme operated by crypto lender, ex-employee alleges lawsuit

A lawsuit filed by the former head of DeFi at Celsius alleges that the cryptocurrency lender operated a Ponzi scheme.

What happened: According to a New York Supreme Court filing, the lawsuit claims Celsius "was desperate for a potential investment that could earn him more than he he owed his depositors".

The complaint was filed by DeFi asset management platform KeyFi which was partially acquired by Celsius in 2020.

"We found out that Celsius lied to us. They didn't cover our business or crypto-asset price fluctuations. The company's entire portfolio had a naked market exposure,” KeyFi CEO Jason Stone wrote on Twitter.

Why it matters: Celsius came under public scrutiny after the platform froze withdrawals due to a liquidity crunch. The company said it is investigating all options to resolve the issue.

On Thursday, Benzinga reported that Celsius successfully repaid $183 million in secured debt to DeFi Maker MKR/USD platform, bringing its liquidation price down to $0.00. The company will now be able to recover its guaranteed Bitcoin BTC/USD.

Price Action: According to data from Benzinga Pro, BTC was trading at $21,954 at press time, gaining 7.6% over 24 hours.

Photo via FellowNeko on Shutterstock

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