Celsius Network files pair of lawsuits to claw back millions of funds

By Sarah Lizee

Olympia, Wash., Aug. 25 – Celsius Network LLC has filed two lawsuits in an attempt to recover millions of funds, according to court documents filed with the U.S. Bankruptcy Court for the Southern District of New York.

The first is against former investment manager Jason Stone and his KeyFi, Inc. company.

Celsius called Stone’s liability to the company “staggering,” and said the coins he apparently lost through gross negligence alone are worth tens of millions of dollars. In addition, the assets that he converted, and the proceeds of those assets, may be worth tens of millions more, the company said.

“All must be turned over to Celsius’ estates for the benefit of Celsius’ creditors,” the company said.

The second lawsuit is against custodian Prime Trust, LLC, which has allegedly failed to turn over to Celsius crypto assets worth about $17 million at recent prices.

For a period in 2020 through mid-2021, crypto assets from New York and Washington users were held by Prime Trust. Its duties were ministerial in nature, and Prime Trust did not take any ownership rights in the crypto assets, Celsius said.

In June 2021, Prime Trust ended its relationship with Celsius and indicated its desire to return the crypto assets it was holding to Celsius. Celsius directed Prime Trust to transfer the crypto assets at issue to Celsius.

Prime Trust complied in part, transferring crypto assets worth roughly $119 million, at recent prices, to Celsius. However, it failed to transfer the remaining $17 million worth of crypto assets, Celsius said.

The Hoboken, N.J.-based cryptocurrency lending platform filed bankruptcy on July 13 under Chapter 11 case number 22-10964.

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