Why An Arkansas Resident Filed A Class-Action Lawsuit Against Celsius?
- An Arkansas resident has filed a lawsuit against US-based crypto lending firm Celsius
- The firm was also sued by KeyFi a former asset manager
Celsius continues to be in the spotlight for its activities, and it seems that after filing for bankruptcy a few days earlier, the number of issues to deal with continues to mount for the firm. A resident of Arkansas, a landlocked state in the South Central United States, Taylor Goines, has filed a lawsuit against the crypto lender.
The class-action lawsuit was initially made public by John Reed Stark. who runs John Reed Stark Consulting, a firm that helps other firms in the fintech space with SEC and FINRA compliance.
Furthermore, Goines represents the plantiff, which includes all the people who bought CEL tokens, engaged in the Celsius Earn Rewards program, and took loans on the platform between Feb 2018 and the present.
The plantiff claims that Celsius has operated like a Ponzi scheme where new people have to be added to repay the debt and rewards of the older customers. Hence, they want to bring the firm to justice under the court.
Furthermore, the court filing also claims that Celsius executives made persistently misleading statements regarding the management of certain products and that the company did not register their yield or interest-bearing products with the Securities and Exchange Commission (SEC).
On the other hand, Celsius is already going through a rough patch as the firm filed for Chapter 11 bankruptcy earlier this week and it seems that the market collapse has took a toll on the firm’s finances. People claim that this is due to the mismanagement of the funds by the firm’s executives including CEO Alex Mashinsky.
The firm currently owes around $4.7 billion to its users as per the Chapter 11 bankruptcy filing. This outstanding amount has been calculated after the firm has paid off its institutional debts.
It satisfied its obligation to Compound, an algorithmic and independent interest rate protocol, and reclaimed the collateral, which was estimated to be worth approximately $200 million. After that, the company paid off the loan that had been provided by Maker Protocol, which is the issuer of the DAI stablecoin. In the end, Celsius also paid $453 million in security, which enabled the company to completely repay its bitcoin loan.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
