Illustration shows Celsius Network logo and representations of cryptocurrencies
Celsius Network logo and representations of cryptocurrencies are seen in this illustration taken, June 13, 2022.

Celsius Network LLC on Tuesday sued a former investment manager, accusing him of losing or stealing tens of millions of dollars in assets before the crypto lender went bankrupt last month.

In a complaint filed in Manhattan bankruptcy court, Celsius accused Jason Stone and his company KeyFi Inc of "gross negligence" and "extraordinarily inept" crypto investing, after Stone falsely portrayed himself as a pioneer in the field.

Celsius said Stone proved "incapable" of deploying coins profitably, causing "many tens of millions of dollars" in losses.

It said he then misappropriated assets to buy hundreds of non-fungible tokens ("NFTs") that he stored out of reach, and covered his tracks by using Tornado Cash, a crypto "mixer" that the U.S. Treasury Department sanctioned on Aug. 8 because it might help launder cybercrime proceeds.

Tuesday's lawsuit was filed six weeks after KeyFi sued Celsius in a New York state court in Manhattan.

It claimed that Celsius ran a Ponzi scheme, mismanaged customer deposits, failed to hedge investments, and cheated Stone out of potentially hundreds of millions of dollars of compensation.

Stone worked with Celsius for about seven months ending in March 2021, court papers show.

In an emailed statement, Stone's lawyer Kyle Roche said KeyFi's compensation, including NFTs, had been authorized by Celsius Chief Executive Alex Mashinsky.

"Celsius's most recent filing is an attempt to rewrite history and use KeyFi and Mr. Stone as a scapegoat for their organizational incompetence," Roche said.

Both lawsuits seek to recoup sums that each side believes the other owes, plus compensatory and punitive damages.

Celsius, based in Hoboken, New Jersey, filed for Chapter 11 protection from creditors on July 13, one month after freezing withdrawals and transfers for its 1.7 million customers because of "extreme" market conditions.

The cases are Celsius Network Ltd et al v Stone et al, U.S. Bankruptcy Court, Southern District of New York, No. 22-ap-01139; and KeyFi Inc v. Celsius Network Ltd et al, New York State Supreme Court, New York County, No. 652367/2022.