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Business News/ Markets / Cryptocurrency/  Celsius lost $350 mn due to high-risk trading strategies: Report
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Celsius lost $350 mn due to high-risk trading strategies: Report

According to an on-chain analysis by blockchain analytics firm Arkham Intelligence, the asset manager has been identified as investment firm Battlestar Capital / KeyFi, led by co-founder and CEO Jason Stone, pseudonymously operating as the well-known '0xB1'

Celsius Network logo and representations of cryptocurrencies are seen in this illustration. (REUTERS)Premium
Celsius Network logo and representations of cryptocurrencies are seen in this illustration. (REUTERS)

Crypto lending platform Celsius entrusted corporate funds worth around $530 million to an asset manager who engaged in high-risk leveraged crypto trading strategies, causing an apparent loss of $350 million of customer funds when the capital compared to the value of the crypto assets Celsius originally sent was returned, according to a report.

According to an on-chain analysis by blockchain analytics firm Arkham Intelligence, the asset manager has been identified as investment firm Battlestar Capital / KeyFi, led by co-founder and CEO Jason Stone, pseudonymously operating as the well-known “0xB1."

In October 2020, following Celsius Network’s acquisition of KeFi, Stone held the title of Head of DeFi Staking at Celsius.

The report further states that Celsius appeared to have spent over $350 million purchasing its own crypto token CEL on exchanges, even though it already had billions of dollars worth of CEL in its treasury.

At the same time, blockchain addresses associated with Celsius CEO Alex Mashinsky appear to have sold nearly $40 million of CEL throughout their lifetime, sometimes on the same exchanges where Celsius bought their own token with corporate funds, while publicly promoting the coin to Celsius customers.

Earlier this morning, “0xB1" had revealed his identity on Twitter, addressing himself as Jason Stone, who, from August 2020 until April 2021, led a group of “talented individuals" who managed the 0xb1 address.

Arkham said that Celsius sent 0xb1 $534 million of crypto assets in 260 transactions ranging in size from $1,000 to $28 million from August 2020 through April 2021, which was then invested in several DeFi yield bearing activities.

0xb1 also purchased NFTs worth $6.3 million, including CryptoPunks, Beeple art and other projects.

Citing a Chainalysis audit, the report states that by December 2020, Celsius had sent $365 million of funds to 0xb1.

“Assuming Chainalysis' audit is correct, 0xb1 had over 10% of all Celsius' assets under management in late 2020," the reports states and adds that in the five months following the audit, Celsius sent 0xb1 another $180 million of their customers' crypto assets.

Meanwhile, KeyFi co-founder and CEO Jason Stone has sued Celsius for allegedly refusing to honor the contract made with me.

Stone is seeking damages for an amount “to be determined at trial."

A lawsuit filed in New York by KeyFi claims that Celsius used customer funds to “manipulate crypto asset markets, had failed to institute basic accounting controls which endangered those same deposits, and had failed to carry through on promises."

Celsius had, on June 12, announced its decision to freeze withdrawals and transfers from its platform for its customers due to “extreme market conditions."

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Published: 08 Jul 2022, 11:15 PM IST
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