Celsius Attempts to Recover $150M From StakeHound

Bankrupt crypto lender Celsius has filed a lawsuit against staking platform StakeHound, which allegedly failed to return $150 million worth of tokens to the company, court documents from 12 July show.

According to the court documents, Celsius had exchanged 35,000 Ether (ETH), 25,000 staked Ether (stETH), 66,000 Polkadot (DOT), and 40 million Polygon (MATIC) for StakeHound’s “stTokens” — which it could use for other investments, or return to StakeHound to get its crypto back — in 2021. The staking platform, however, “has failed and refused to return” Celsius’ original tokens when asked, and filed an arbitration agreement against Celsius after the company had gone bankrupt. Celsius’ complaint reads:

“StakeHound should be required to turn over to Celsius the tokens in its actual or constructive possession or otherwise provide the Native Tokens in exchange of the stTokens, and pay actual and exemplary damages, attorneys’ fees, and pre- and post-judgment interest arising from its breaches of duty and willful misconduct, and should be enjoined from continuing to pursue arbitration against Celsius in violation of the automatic stay.”

In its arbitration filing, StakeHound argued that it had “no obligation” to exchange the stTokens for Celsius’ original crypto. The staking platform further said it had lost the private keys connected to Celsius’ 35,000 ETH, which relieved it of its obligation to return these tokens.

Celsius’ complaint claims that StakeHound’s arbitration filing was in violation of section 362 of the U.S. Bankruptcy Code — also known as the “automatic stay” rule — which prohibits creditors from taking taking legal action against a person or company as soon as they file for bankruptcy. The crypto lender also noted that despite StakeHound’s blunder with the private keys, it was still obliged to return the tokens it owed.