Celsius Network Sues StakeHound for Recovery of $150M in Tokens, Alleges Breach of Duty
In a dramatic turn of events, Celsius Network, the bankrupt crypto lender, has filed a lawsuit against liquid stacking platform StakeHound, seeking the recovery of $150 million worth of tokens. The legal action comes after StakeHound allegedly failed to return the tokens owned by Celsius, further complicating the already tumultuous bankruptcy proceedings.
According to a court document submitted by Celsius, the tokens in question include 40 million Polygon MATIC, 66,000 Polkadot, 25,000 staked Ether (stETH), and 35,000 Ether, collectively valued at $150 million. Celsius claims that, in exchange for these tokens, they received “stTokens” which were intended for deployment in other investments or return to StakeHound to retrieve their crypto assets. However, the recent filing alleges that StakeHound initiated arbitration proceedings against Celsius, arguing that it is not obligated to exchange native ETH for the stTokens due to breaches of duty to Celsius.
Celsius contends that StakeHound’s arbitration filing violates section 362 of the United States Bankruptcy Code, commonly known as the automatic stay rule. This rule prohibits creditors from initiating legal actions or collecting debts from a company or individual immediately after they file for bankruptcy. The lawsuit further exacerbates the legal complexities surrounding the bankruptcy proceedings of both Celsius and StakeHound.
Notably, this legal dispute is not the first clash between the two entities. Last year, Celsius reportedly lost 35,000 ETH when StakeHound misplaced private keys, resulting in the loss of approximately 38,000 ETH. Celsius argues that it should be relieved of its obligation to repay these assets due to StakeHound’s negligence.
Since filing for bankruptcy almost a year ago, Celsius has been striving to restructure its operations. On February 15, the company presented a restructuring plan that advocates for the creation of a public platform owned by Earn creators, sponsored by digital asset investment firm NovaWulf. However, with the recent lawsuit against StakeHound, the path to recovery and restructuring becomes even more uncertain for Celsius Network.
As the legal battle ensues, the crypto community watches closely, awaiting the resolution of this high-stakes dispute that could have far-reaching implications for the future of lending and staking platforms.
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