Crypto lender that continues to grapple with problems Celsiuswas sued by a former asset manager on Thursday. In the lawsuit in question, it was claimed that the firm had a “Ponzi Plan”.
In a lawsuit filed in New York state court in Manhattan, Celsius himself CEL tokenallegedly used customer deposits to inflate its price and manipulate the broader crypto markets. Unable to effectively manage the risk associated with the deposits used, the firm faced a liquidity crunch some time ago and had to freeze its withdrawals.
The lawsuit was filed, which ran assets for Celsius until March last year. Arbitrary opened by The lawsuit also includes the allegation that the lender failed to pay KeyFi for its services.
More Blame from KeyFi to Celsius Firm
Jason Stone, a key figure in the lawsuit, claimed at one point that KeyFi managed nearly $2 billion in assets for Celsius. During this time, the asset manager stated that he became aware of the fact that Celsius has taken no action against the risks.
The lawsuit states that “the recent revelation that Celsius did not have the assets at his disposal to meet his withdrawal obligations and that the defendants had actually had a “Ponzi PlanHe claims that “it shows what they have established”.
Stone said in a Twitter post that the lack of consistent risk management by Celsius is now leading to a lender’s liquidity crunch. Recent media reports have revealed that Celsius is hiring restructuring attorneys and is currently in the process of negotiating potential bankruptcy.
These Events Can Affect Bitcoin Price
Celsius is currently in the process of completing its dues to various lenders. The platform had recently paid off its debt to the Maker DAO. Shortly thereafter, however, he mobilized around $500 million worth of Wrapped Bitcoin to FTX. This may indicate that Celsius is preparing to dump its tokens to increase its liquidity.
While this scenario, if it actually happens, could help the lender recover from a bankruptcy, it would also have a negative impact on the Bitcoin price. But it remains unclear whether the lender will be able to fully reimburse its customers.
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Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.