Celsius Files Lawsuit Against StakeHound Over $150 Million Token Dispute
Key Points:
- Celsius sued StakeHound over the alleged failure to return $150 million worth of tokens.
- StakeHound refuses to exchange the tokens, citing lost keys and claiming no obligation to return them.
- The company’s debtor submitted a disclosure statement for a joint Chapter 11 reorganization plan.
Celsius, the bankrupt cryptocurrency lender, has filed a lawsuit against liquid staking platform StakeHound over allegations that it failed to return tokens worth $150 million.
The tokens in question include Ether (ETH), MATIC from Polygon, DOT from Polkadot, and others. According to court filings, Celsius entrusted StakeHound with 25,000 staked native ETH, 35,000 native ETH, 40 million MATIC, and 66,000 DOT in 2021.
In exchange, Celsius received StakeHound’s liquid staking “stTokens.” However, StakeHound allegedly refused to exchange the stTokens for other tokens, claiming it had no obligation to do so. They also cited the loss of the keys associated with 35,000 Celsius ETH as a reason for not returning the tokens.
StakeHound had previously filed an arbitration agreement against Celsius in Switzerland after the lender’s bankruptcy, which the company argues is a violation of Section 362 of the United States Bankruptcy Code. This section, known as the automatic stay, prevents creditors from collecting debts or initiating legal action against a person or company that has filed for bankruptcy.
StakeHound blamed the custody provider, Fireblocks, for the loss and had previously launched a lawsuit against them. However, Celsius asserts that StakeHound’s relationship with Fireblocks does not absolve them of their obligation to return the tokens owed.
Celsius, which positions itself as a democratized interest income and lending platform, had over $8 billion lent out to clients and $12 billion in assets under management. The withdrawal freeze has led to job cuts at Coinbase, BlockFi, and Crypto.com, while insolvency concerns are emerging from crypto hedge fund Three Arrows Capital. The overall trust in the crypto industry has also been negatively affected by recent events, including the LUNA crisis and the troubles at Celsius, resulting in a significant loss of value amounting to $60 billion in last year.
The outcome of the lawsuit between Celsius and StakeHound will have significant implications for the recovery of the $150 million worth of tokens and the broader trust in the cryptocurrency industry.
The debtor previously filed a disclosure statement for a joint Chapter 11 reorganization plan, according to a notice by the Celsius Unsecured Creditors Committee. A hearing to consider the disclosure statement has been set for August 10. The Court will decide whether the statement offers enough information for creditors to vote on the proposal at this hearing.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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Celsius Files Lawsuit Against StakeHound Over $150 Million Token Dispute
Key Points:
- Celsius sued StakeHound over the alleged failure to return $150 million worth of tokens.
- StakeHound refuses to exchange the tokens, citing lost keys and claiming no obligation to return them.
- The company’s debtor submitted a disclosure statement for a joint Chapter 11 reorganization plan.
Celsius, the bankrupt cryptocurrency lender, has filed a lawsuit against liquid staking platform StakeHound over allegations that it failed to return tokens worth $150 million.
The tokens in question include Ether (ETH), MATIC from Polygon, DOT from Polkadot, and others. According to court filings, Celsius entrusted StakeHound with 25,000 staked native ETH, 35,000 native ETH, 40 million MATIC, and 66,000 DOT in 2021.
In exchange, Celsius received StakeHound’s liquid staking “stTokens.” However, StakeHound allegedly refused to exchange the stTokens for other tokens, claiming it had no obligation to do so. They also cited the loss of the keys associated with 35,000 Celsius ETH as a reason for not returning the tokens.
StakeHound had previously filed an arbitration agreement against Celsius in Switzerland after the lender’s bankruptcy, which the company argues is a violation of Section 362 of the United States Bankruptcy Code. This section, known as the automatic stay, prevents creditors from collecting debts or initiating legal action against a person or company that has filed for bankruptcy.
StakeHound blamed the custody provider, Fireblocks, for the loss and had previously launched a lawsuit against them. However, Celsius asserts that StakeHound’s relationship with Fireblocks does not absolve them of their obligation to return the tokens owed.
Celsius, which positions itself as a democratized interest income and lending platform, had over $8 billion lent out to clients and $12 billion in assets under management. The withdrawal freeze has led to job cuts at Coinbase, BlockFi, and Crypto.com, while insolvency concerns are emerging from crypto hedge fund Three Arrows Capital. The overall trust in the crypto industry has also been negatively affected by recent events, including the LUNA crisis and the troubles at Celsius, resulting in a significant loss of value amounting to $60 billion in last year.
The outcome of the lawsuit between Celsius and StakeHound will have significant implications for the recovery of the $150 million worth of tokens and the broader trust in the cryptocurrency industry.
The debtor previously filed a disclosure statement for a joint Chapter 11 reorganization plan, according to a notice by the Celsius Unsecured Creditors Committee. A hearing to consider the disclosure statement has been set for August 10. The Court will decide whether the statement offers enough information for creditors to vote on the proposal at this hearing.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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