The troubled crypto lending platform Celsius Network is reportedly using investor funds to conduct high-risk leveraged crypto trading activities.
Also Read What is Celsius Network ? (CEL)
As per a new report by blockchain analytics company Arkham Intelligence, Celsius Network entrusted corporate money worth around $530 million to an asset director engaged in high-risk leveraged trading strategies. These highly risky trading strategies led to an apparent loss of $350 million. This is confirmed as the amount returned by the asset manager was $350 million, lesser than the value of crypto assets Celsius Network originally sent.
The report predicted that these crypto-assets might correspond to the platform’s liabilities to customers. Arkham said that it has “identified the asset manager as the team behind investment firm Battlestar Capital / KeyFi, led by co-founder and CEO Jason Stone, pseudonymously operating as the well-known 0xB1.”
0Xb1 was trading on behalf of Celsius Network
Notably, in October 2020, when Celsius Network acquired KeFi, Stone was the Head of DeFi Staking at the company. Moreover, Stone recently filed a lawsuit against Celsius, accusing it of fraud, improper management of customers’ funds, and breach of contract by KeyFi.
Further, the study implied that Celsius’ customer liabilities might include crypto assets. From August 2020 to April 2021, 0xb1 received $534 million in digital assets from Celsius. There were 220 transactions in total, with values ranging from $10 to $28 million, according to Arkham.
After that, 0xb1 invested this money in a variety of yield-generating activities, including yield farming across multiple platforms, lending and borrowing on Compound and AAVE, and providing liquidity on DEXs. Even NFTs worth $6.3 million were purchased.
According to a Chainalysis audit published in December 2020, Celsius Network had $3.31 billion in AUM. The crypto lender has already sent 0xB1 $365 million prior to the audit. According to an assumption made by Arkham, if the audit is accurate, 0xb1 will have owned more than 10% of Celsius’ assets by the end of 2020. Celsius sent an additional $180 million of its customers’ money to 0xB1 five months after Chainalysis was made available.