Cryptocurrency lender Celsius Network has taken legal action against liquid staking platform StakeHound, alleging that it failed to return $150 million worth of tokens owned by Celsius. The lawsuit, filed by Celsius, claims that the company invested $40 million in various tokens including Matic and Polkadot , as well as 25,000 staked ether (stETH) and 35,000 ether, which have a combined value of $150 million.
In return for the tokens, Celsius received "stTokens" that it could use for other investments or return to StakeHound to retrieve its cryptocurrency. However, StakeHound initiated arbitration against Celsius, arguing that it was not obligated to convert native ETH into stTokens due to an alleged breach of obligations by Celsius. Celsius argues that StakeHound's arbitration filing violated Section 362 of the US Bankruptcy Code, which prohibits creditors from taking legal action or collecting debts immediately after a bankruptcy filing.
The court document also asserts that StakeHound should be compelled to return Celsius' property immediately and provide compensation for damages resulting from the breach of contractual obligations. Celsius claims that it lost 35,000 ETH in 2022 when StakeHound lost its private key, resulting in a total loss of approximately 38,000 ETH. Celsius contends that it is relieved from the obligation to repay these assets. Since filing for bankruptcy nearly a year ago, Celsius has faced challenges in its restructuring efforts. It recently proposed a restructuring plan that aims to establish a public platform Owned by Earn creators and sponsored by digital asset investment firm NovaWulf.
These legal proceedings further complicate Celsius Network's attempts to navigate its bankruptcy and recover its assets. The outcome of the lawsuit will determine whether Celsius can reclaim its tokens and seek compensation for any damages incurred due to StakeHound' s alleged breach of obligations.
