Cryptocurrency loan company Celsius Network has filed a lawsuit against liquid lending platform StakeHound, aiming to recover $150 million worth of tokens allegedly owed to Celsius. The legal action seeks to reclaim the outstanding tokens from StakeHound.
In court documents, it asserts that StakeHound has not returned 40 million Polygon (MATIC) tokens, 66,000 Polkadot (DOT) tokens, 25,000 staked ETHER (stETH), and 35,000 Ether (ETH). StakeHound received these tokens with a market value of $150 million.
It exchanged the tokens for “tokens,” which could be used for investments or returned to StakeHound. These tokens represented the original cryptocurrency holdings. It claims that StakeHound initiated arbitration, arguing against exchanging tokens for native ETH. The dispute stems from alleged duties violations by Celsius. Celsius claims this action by StakeHound in response to breaches of duty.
It alleges that StakeHound’s arbitration filing violates section 362 of the US Bankruptcy Code. This section enforces an automatic stay rule preventing creditors from pursuing legal action or collecting debts after a bankruptcy filing. Celsius claims that StakeHound’s actions breach this rule.
Celsius Network Sues StakeHound for Stolen ETH Amidst Restructuring Efforts
It demands a prompt return of its tokens and compensation for alleged contractual violations from StakeHound.
The outcome of the legal case will determine Celsius’ ability to recover its substantial token holdings and seek compensation for damages. It seeks redress for alleged contractual breaches by StakeHound. The incident emphasizes the value of trust and contractual duties within the lending and staking ecosystem for cryptocurrencies.
Celsius Network is suing StakeHound for the theft of 35,000 ETH and the refusal to refund the stolen property. According to reports, StakeHound misplaced private keys, which led to the loss of almost 38,000 ETH, including 35,000 ETH that belonged to Celsius. The purpose of the legal action is to resolve the disagreement and address the need to return the assets.
[DB] Celsius Lost 35,000 ETH When Stakehound “Misplaced” Private Keys
— db (@tier10k) July 14, 2022
Since declaring bankruptcy a little over a year ago, Celsius has been actively pursuing a reorganization strategy. The idea, put up on February 15, is for developing a publicly accessible platform that would be backed by the digital asset investment company NovaWulf and controlled by the people who created Earn. With this restructuring, it hopes to improve its financial situation and forge ahead in the cryptocurrency lending sector.