Although battered and bankrupt, the Celsius Network (CEL-USD) is not going down quietly. Refusing to liquidate and fizzle out, it’s taking the tumultuous and uncertain path down Chapter 11 bankruptcy protections and battling with creditors in court to plug its sinking ship. Now, Celsius is also taking a step on the offensive, opening up a pair of lawsuits against old business partners.
Celsius and adversity go hand in hand; the company has not caught any breaks since the start of the crypto winter. Celsius first made a name for itself among crypto faithful, churning out plenty of high-return staking opportunities and having its own trading floor to boot. However, like many other companies, it got a bit overzealous. With the plummet of crypto prices, Celsius’ many over-leveraged loans with DeFi protocols put it in massive debt.
Unwilling to part out its existing assets and call it quits, though, the company filed for Chapter 11 bankruptcy. This is giving Celsius a chance at a second life, something it has shown promise in completing after fully paying down some of its most sizable debts.
Still, Celsius faces more and more volatility as it walks this treacherous road, thanks to disputes with creditors in the bankruptcy proceedings. The two bodies had differing views on whether Celsius’ plan to mine crypto to pay off its debts would work. Ultimately, a judge has ruled with Celsius, allowing it to tap its mining subsidiary to generate money needed to reverse its bankruptcy.
Celsius Network Launches Two Lawsuits Against Old Partners
The Celsius Network has faced volatility out of the courtroom in recent weeks as well. First, DeFi aggregator KeyFi began a lawsuit against Celsius back in early July. Apparently, Celsius had been giving investor funds to KeyFi to invest in exchange for a cut of any profits. KeyFi asserts that Celsius refused to keep to agreed-upon figures in its new court complaint. Now this week, Celsius is going on the offensive with a countersuit, as well as another suit against a different partner.
Celsius’s countersuit against KeyFi and KeyFi CEO Jason Stone alleges that the company misrepresented itself to Celsius in business deals. Specifically, the company accuses Stone of misrepresenting himself as a DeFi expert. After losing a sizable amount of money through its KeyFi partnership, Celsius is blaming KeyFi’s “incompetence, deceit and conversion” for much of its current financial woes.
Atop failing to generate any profit for Celsius through its staking services, the company also accuses KeyFi of theft. The complaint asserts that KeyFi took CEL tokens and spent them on other investments, using Tornado Cash to hide this activity.
While that battle heats up, Celsius is also turning its efforts on another suit against crypto custodian Prime Trust. This suit alleges that Prime Trust is still holding onto $17 million worth of Celsius’ assets, which it refuses to give back. After severing its relationship with Celsius in June 2021, Prime Trust allegedly continues to hang onto nearly 400 Bitcoin (BTC-USD), 200,000 CEL tokens, 2.2 million USDCoin (USDC-USD) and over 3,700 Ethereum (ETH-USD).
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.