Celsius Network Sues StakeHound Over $150M in Crypto Tokens

In its battle to retrieve tokens valued at $150 million, bankrupt crypto lending platform Celsius Network has brought legal action against a liquid staking firm, StakeHound.

In the lawsuit filed for the United States Bankruptcy Court for the Southern District of New York on July 11th, Celsius accuses StakeHound with failed to return tokens owned by the firm.

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Celsius claims that it transferred 40 million Polygon (MATIC), 66,000 Polkadot (DOT), 35,000 Ether (ETH), and 25,000 staked native Ether to StakeHound. Based on Celsius, the above-mentioned tokens are worth $150 million.

By providing these tokens, Celsius was given "stTokens" in return. These tokens could either be used by Celsius for other investment ventures or given back to StakeHound in exchange for their original crypto tokens.

Yet, StakeHound has apparently initiated arbitration against Celsius and claimed it's under no obligation to return the native ETH for the stTokens after being accused of breaching its responsibilities to Celsius. 

In response, Celsius states that the move for arbitration by StakeHound violates the United States Bankruptcy Code section 362. The code, often called the "automatic stay" rule, forbids creditors from taking legal actions or collecting debt from an individual or company that has filed for bankruptcy.

Moreover, in the legal filing, Celsius also asserted that StakeHound should be mandated to immediately "turn over Celsius' property" and compensate for damages caused by the failure to uphold contractual duties.

Last year the news broke that Celsius lost 35,000 ETH when StakeHound "misplaced" the private keys for approximately 38,000 ETH.

Following its bankruptcy filing, Celsius has been making strides toward restructuring. On February 15th, Celsius presented a restructuring proposal that advocates for the creation of a public platform, which will be managed by Earn creators and backed by NovaWulf.

The legal dispute presents yet another hurdle in Celsius Network's struggle to restructure and recover from its bankruptcy filing.