Key takeaways:
- Due to the alleged inability to release tokens worth $150 million, Celsius filed a lawsuit against StakeHound.
- In return for the tokens, Celsius received “stTokens,” which they could use to make additional investments or give back to StakeHound to get their cryptocurrency.
The liquid staking platform StakeHound is being sued by bankrupt cryptocurrency lender Celsius Network because, according to the lawsuit, it failed to refund tokens worth $150 million that belonged to Celsius.
The corporation invested 40 million Polygon, 66,000 Polkadot, 25,000 staked Ether (stETH), and 35,000 Ether, according to a court document Celsius submitted. The total value of these tokens, according to Celsius, is $150 million.
In return for the tokens, Celsius received “stTokens,” which they could use to make additional investments or give back to StakeHound to get their cryptocurrency. However, the most recent filing claimed that StakeHound, when confronted with its breaches of duty to Celsius, wanted arbitration against Celsius and claimed it “has no obligation” to convert native ETH for the stTokens.
In 2022, it was revealed that Celsius lost 35,000 ETH, or roughly 38,000 ETH after StakeHound lost its private keys. The business claims that it is no longer required to repay these assets. Celsius has been attempting to restructure since declaring bankruptcy almost a year ago.
Following the lender’s bankruptcy, StakeHound filed an arbitration agreement against Celsius in Switzerland, which the business claims is under Section 362 of the United States Bankruptcy Code. The automatic stay, a part of the bankruptcy code, forbids creditors from pursuing debt collection or legal action against a person or business that has filed for bankruptcy.
StakeHound filed a lawsuit against Fireblocks, the company that provided the custody, and accused them of being responsible for the loss. Additionally, Celsius said in the filing that StakeHound should be compelled to hand over Celsius’ property immediately and pay damages resulting from its violations of contractual obligations.
The resolution of the legal dispute between Celsius and StakeHound will significantly impact the industry’s overall reputation and the ability to retrieve tokens valued at $150 million.
According to a notice from the Celsius Unsecured Creditors Committee, the debtor had previously filed a disclosure document for a joint Chapter 11 reorganization plan. The disclosure statement will be discussed at a hearing on August 10th. At this hearing, the Court will determine whether the statement provides sufficient details for creditors to cast a vote on the proposal.
