Celsius Network Sues StakeHound Over $150 Million Token Dispute

The insolvent cryptocurrency lender Celsius Network has filed a lawsuit against the liquid staking platform StakeHound for allegedly failing to return $150 million worth of Celsius’s tokens.

Advertisement Celsius placed 40 million Polygon MATIC, 66,000 Polkadot, 25,000 staked Ether (stETH), and 35,000 Ether, according to a court document. Celsius emphasized that the total value of these tokens is $150 million.

In exchange for the tokens, Celsius received “stTokens,” which it could use for other investments or return to StakeHound to obtain its cryptocurrency back.

StakeHound allegedly demanded arbitration against Celsius and argued that it “has no obligation” to exchange native ETH for stTokens after being confronted with its breaches of duty to Celsius, according to a recent filing.

Excerpt of the court filing by Celsius Network. Source: Stretto

Celsius asserts that StakeHound’s petition for arbitration violates Section 362 of the United States Bankruptcy Code, also known as the automatic stay rule.

This rule prohibits creditors from pursuing legal action or debt collection against a company or individual who has filed for bankruptcy.

In addition, Celsius argued in the filing that “StakeHound should be required to immediately turn over Celsius’ property” and pay damages resulting from its breaches of contractual obligations.

In 2022, it was reported that Celsius lost 35,000 ETH due to the loss of private keys by StakeHound, for a total loss of approximately 38,000 ETH.

The company contends that it is no longer obligated to repay these assets. Since filing for bankruptcy nearly a year ago, Celsius has been attempting to restructure.

On February 15, Celsius presented a reorganization plan that promotes the establishment of a public platform owned by Earn creators and sponsored by digital asset investment firm NovaWulf.