Bankrupt Bitcoin, Mining firm Core Scientific has objected to paying a $4.7 million administrative claim brought by crypto lender Celsius Network, leading to a dispute between the companies over contractual obligations.
According to an objection filed May 5 in Texas bankruptcy court, Core Scientific asked to dismiss Celsius Network's $4.7 million administrative claim because the company could not prove that it was entitled to one.
“Celsius' request for stipends and immediate payment of Celsius’ alleged administrator’s claim ignores Core’s substantial claim against Celsius, which Core believes exceeds Celsius’ alleged administrator’s claim,” the dissenting opinion read.
For context, Core first signed a contract with Celsius in 2020 to host its cryptocurrency holdings in Core's data centers. However, Core passed on these additional costs to Celsius due to higher electricity prices, reportedly as an allowance stipulated in the original contract. Core Scientific Claimed in the dissent that although Celsius initially paid the fees, the cryptocurrency lender stopped making payments after filing for bankruptcy protection.
"If anyone gets unjustly rich here, it's Celsius," Core Scientific wrote in a dissenting opinion. According to the now-defunct bitcoin miner, Celsius has been “owing Core nearly $8 million” due to an agreed upon dispute resolution mechanism in “fla grant violations of post-petition regulations.” Lawyers for the bitcoin mining company argue that Celsius now owes Core Scientific a total of about $11 million, an amount that adds an additional $28,000 a day in fees and interest.
The conflict between the two companies has been intensifying since Oct. 19, when Core Scientific first accused Celsius of failing to pay its electricity bills, saying that non-payment was a significant factor in the liquidity problems that led embattled bitcoin min ers to apply. 11 bankruptcy on December 21.
"Core lost millions of dollars after Celsius filed for bankruptcy, which, combined with millions of dollars in litigation. contributed significantly to Core's liquidity drying up and eventual Chapter 11 filing." On December 28, Core Scientific filed a motion se eking approval to reject Celsius ' contract, claiming the company's failure to pay electricity bills constituted a material breach of contract. On Jan. 3, Celsius agreed to have Core Scientific shut down the more than 37,000 bitcoin mining rigs the miner was hosting for cryptocurrency l enders.
