2022-7-8 17:48 |
Celsius Network’s troubles are mounting even as the crypto lender navigates a storm that it may have actually rode into knowingly.
On Thursday, the crypto lender was hit by a class action lawsuit, filed by a former Celsius insider Jason Stone.
Stone, Celsius’ former investment manager, says the company ran a fraud and among the many missteps they took was the ploy to artificially inflate the price of CEL – the platform’s native token.
Celsius ‘induced’ customers’ to accept CEL…it was a schemeStone lays forth several allegations against Celsius, a company he worked with until March 2021. He alleges that by the time he quit their “relationship” forged via a trading strategies firm Celsius KeyFi that he (Stone) formed, Celsius already had a $100-$200 million hole in its balance sheet.
These losses came as a result of the crypto lender not adhering to “basic accounting” principles. The malpractices spanned several incidents and clearly endangered customer funds, he noted in the lawsuit.
Yet, Celsius lured customers with high yields and added to the dangling carrot by asking depositors to accept the native CEL token for higher interest rates.
Per the lawsuit, the lender then went on to manipulate the price of the CEL token, “purposefully and artificially inflating” it to the company’s benefit.
Stone notes in the lawsuit:
The purpose of this scheme was both fraudulent and illegal: Celsius induced customers to be paid in CEL tokens by providing them with higher interest rates. Then by purposefully and artificially inflating the price of the CEL token, Celsius was able to pay customers who had elected to receive their interest payments in the form of the CEL token even less of the crypto-asset.”
But the company was hitting losses amid massive leveraging. With no holdings to allow for customers withdrawals in denominated coins like ETH, Celsius was forced to buy at even more losses as price rocketed. The rot however, continued with the promise of higher interest to lure new customers whose deposits also went into withdrawals.
Stone says the crypto lender became just another “Ponzi scheme”
Thus, while Celsius continued to market itself as a transparent and well capitalized business, in reality, it had become a Ponzi scheme.”
Stone resigned as CEO of Celsius KeyFi on 9 March 2021.
The post Celsius ‘artificially’ inflated the price of CEL, lawsuit alleges appeared first on Invezz.
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