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Celsius Sues KeyFi and Prime Trust For Millions of Dollars
In the most recent chapter of the Celsius bankruptcy case, the crypto lender is demanding that Prime Trust return $17 million in crypto assets, and is suing Jason Stone for the theft of “many tens of millions of dollars.”
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The bankrupt crypto lender Celsius filed two lawsuits with United States Bankruptcy Court for the Southern District of New York on Tuesday, August 23rd. It is accusing Jason Stone, the CEO of KeyFi, of theft, and Prime Trust of failing to return $17 million in crypto assets.
Celsius v. KeyFi
The lawsuit filed against Jason Stone and his company KeyFi claims that the defendants were able to damage the Celsius network and its community by misrepresenting themselves in order to gain access to Celsius’ tokens.
The accusation states that Stone presented himself as an expert in coin staking but failed to achieve any gains and instead “lost thousands of Celsius coins through their gross mismanagement”. Furthermore, the defendant apparently stole millions of dollars in crypto by transferring various digital assets from Celsius wallets to ones he and his company controlled.
Allegedly, Stone then used these assets to purchase NFTs and pocketed any profits. The lawsuit also makes mention of the recently-banned crypto mixer Tornado Cash and claims it was used by the defendant to launder the income he siphoned from Celsius.
The filing also estimates the value of misappropriated assets at “tens of millions of dollars” and the value generated from these assets as maybe “worth tens of millions more.” Celsius is demanding the return of these assets and proceeds to the network and its creditors and is pursuing the payment of additional damages.
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Celsius v. Prime Trust
One of the first major concerns for users following Celsius’ bankruptcy was the fate of the assets in the “Earn” service. This service is explained as a program where users “grant Celsius all rights and title to the crypto assets from the time the user transfers the assets until the assets are transferred back to the user.”
The second lawsuit filed on Tuesday marks Prime Trust as a holder of some of these assets. The document explains that Prime Trust’s duties were ministerial in nature and that the company didn’t take ownership of any assets.
Celius states that Prime Trust returned approximately $119 million in assets after the two companies terminated their relationship in 2021. However, Prime Trust is accused of keeping a part of Celsius’ digital assets with the estimated value of $17 million.
The lawsuit demands the return of these remaining assets and cites section 542 of the Bankruptcy Code.
Do you think Celsius and its users will see any assets returned? Let us know in the comments below.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
