Cryptocurrencies | CDPQ partner accused of orchestrating Ponzi scheme

Celsius Network is accused of having set up a “Ponzi” scheme by an ex-business partner, who decided to sever business ties with this cryptobank in March 2021, a few months before it hosted the Caisse de dépôt et placement du Québec (CDPQ) with its shareholders.

Julien Arsenault
The Press

The plaintiff is Jason Stone, CEO of KeyFi, a cryptocurrency niche investment firm. In his lawsuit filed with the New York State Supreme Court, he claims he managed billions of dollars for Celsius Network – currently in turmoil – between August 2020 and 2021.

“In the face of mounting evidence of defendants’ disorganization, mismanagement and fraud, plaintiff concluded that he could no longer work for them,” reads the approximately 30-page document. In March 2021 (Mr. Stone) informed (Celsius Network) that he was terminating the business relationship. »

These allegations have yet to be proven in court.

The leader of KeyFi alleges that he was not paid by his partner, who on June 12 froze withdrawals and transfers from his 1.7 million customers due to what is perceived as a liquidity crisis.

According to the lawsuit, Mr. Stone discovered that Celsius Network was using its clients’ deposits to “manipulate the crypto-asset markets”. Moreover, the company would not have put in place the processes to avoid a liquidity crisis.

Cryptobanks like Celsius are inspired by the model of traditional banks. They pool deposits of cryptocurrencies like bitcoin and offer loans and interest, often above 10%, to depositors. However, these players are unregulated and nothing protects depositors’ money.

Mr. Stone alleges that the company used deposits from its new customers to pay returns to depositors.

“While Celsius continued to present itself as a transparent and well-capitalized company, it had, in effect, become a Ponzi scheme,” he argues.

A Ponzi scheme consists of using the sums belonging to an investor to pay false returns to other investors or to reimburse those who wish to recover their money, according to the Autorité des marchés financiers (AMF).

Last fall, the CDPQ invested around 190 million in Celsius Network, presenting the cryptobank as a “world-class company”. The investment of Quebecers’ woolen socks is in danger since the fate of its partner is uncertain.

On Friday morning, the Caisse and Celsius did not respond to questions sent by The Press.