Celsius seeks to retrieve $150 million from StakeHound
The troubled crypto lender Celsius Network has initiated a lawsuit against StakeHound for allegedly failing to return $150 million worth of tokens that Celsius had put up with the liquid staking platform.
As per court documents, the tokens in question include 40 million Polygon (MATIC) tokens valued at $0.7239 each, 66,000 Polkadot (DOT) tokens valued at $5.15 each, 25,000 staked Ether (stETH), and 35,000 Ether (ETH) tokens valued at $1,873 each.
StakeHound, which ceased its staking operations in June 2021, has been wrapping Celsius assets into “staked tokens” that represented the underlying assets on a 1:1 basis, allowing it and other users to earn rewards for their staked tokens. During the period when their assets were locked, customers received “stTokens” as proof of ownership, which they could present to retrieve their original tokens.
However, the lawsuit alleges that StakeHound demanded arbitration against Celsius and argued that it has no obligation to exchange the native ETH for the stTokens due to breaches of duty to Celsius.
StakeHound claims that it lost these assets, which Celsius estimates its combined value at $150 million, due to an alleged error by a third company storing the assets, Fireblocks. In June 2022, the staking platform issued a suit in Tel Aviv against the Israel-based firm for negligence, which Fireblocks denies.
Celsius also accused StakeHound of violating bankruptcy regulations by initiating an arbitration process against Celsius in Switzerland. Commonly referred to as the automatic stay rule, Celsius says the law prohibits creditors from pursuing legal action or collecting debts from a company or individual once they have filed for bankruptcy.
Earlier in May, Celsius selected Fahrenheit’s proposal as the winning bid to oversee a new entity owned by its creditors, paving the way for its exit from bankruptcy.
Fahrenheit, a consortium led by blockchain-based venture capital firm Arrington Capital, will bring the necessary capital, management team, and technology to establish and run the newly formed company, called NewCo. The latter will manage illiquid assets, including institutional loan portfolio, mining business, and alternative investments.
Furthermore, Celsius disclosed that it has obtained a backup bid from the Blockchain Recovery Investment Consortium (BRIC), which is a holding company affiliated with Gemini Trust, owned by the Winklevoss brothers. As part of the deal, the new company will be mandated to receive $500 million in liquid cryptocurrency. However, this amount may be lowered to $450 million if there are secondary market purchases involved.
