Celsius seeks to recover 40 million MATIC, 25000 staked native ETH, 66000 DOT, and 35000 ETH from StakeHound, a liquid staking platform.
A lawsuit has been filed against StakeHound, a liquid staking platform, by Celsius Network, an insolvent crypto lender. This follows the company’s failure to return tokens worth $150 million owned by Celsius.
Celsius Alleges Stakehound Illegally Holding onto Digital Wealth
A court document filed by Celsius shows that the organization placed 66000 Polkadot, 40 million Polygon, 35000 Ether, and 25000 staked Ether (stETH). Additionally, Celsius revealed that the tokens’ overall worth is $150 million.
In return for the tokens, Celsius accepted ‘stTokens’ that could be deployed on other investments or taken back to StakeHound. Nevertheless, allegations in the recent filing reveal that StakeHound requested arbitration against Celsius and claimed it lacks the responsibility to swap native ETH for stTokens. This follows its confrontation evoked by its duty breaches to Celsius.
Celsius Accuse StakeHound of Violating US Bankruptcy Code
Celsius believes that the arbitration filing by StakeHound goes against section 362 of the U.S Bankruptcy Code, also referred to as the automatic stay rule. According to the rule, creditors are prevented from collecting debts or initiating legal action against an individual or firm immediately after filing for bankruptcy.
Additionally, Celsius claimed that StakeHound should instantly return Celsius’ property and compensate for the damages attributed to contravening contractual duties.
Despite contacting StakeHound and Celsius Network for comments, none were provided.
StakeHound Accuses Celsius of Losing Private Keys to ETH
A 2022 report revealed that StakeHound lost private keys worth approximately 38000 ETH, which resulted in Celsius losing 35000 ETH. The organization claims that the responsibility to repay the assets was relieved by loss of keys.
Celsius has been attempting to restructure since it filed for bankruptcy nearly a year ago. On 15th February, a restructuring plan pushing for the creation of a public forum owned by Earned creators was presented. Novawulf, a digital asset investment firm, will sponsor it.
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