- Celsius confronted StakeHound with breach of duty, they retaliated with lawsuit
- StakeHound can’t return any ETH because they misplaced private keys
- Celsius has claimed damages due to performance delay
Celsius Network, which filed for bankruptcy a year ago, is suing liquid staking platform StakeHound after it failed to return Celsius tokens worth $150 million.
According to a court document filed by Celsius, StakeHound not only didn’t return the funds, but also took legal action after Celsius confronted them with breach of duty in knowing violation of Section 362 of the United States Bankruptcy Code.
Celsius is stuck with “stTokens”
StakeHound provides liquidity to holders of “staked” Native Tokens, which can earn rewards and interest, but cannot be used until they are unstaked. The platform issues “stTokens” in exchange for a share of the rewards and for controlling the validator nodes for users’ staked Native Tokens. The user is supposed to be able to invest stTokens in other things. When they want their native tokens back or to cash in their rewards, they must present the stTokens to StakeHound.
Celsius staked ETH worth $120M, MATIC for $30M
Allegedly, StakeHound is unlawfully holding large amounts of Celsius native tokens. In November 2020, Celsius staked around 25,000 native ETH, whose value exceeds $50 million at current rates. In the spring of 2021, StakeHound staked another 35,000 native ETH, whose value exceeds $70 million.
Celsius also transferred 40 million native MATIC tokens and 66,000 DOT tokens. Those are worth more than $30 million at current prices.
Misplaced keys?
StakeHound has stated they can’t return any ETH because they misplaced private keys associated with the ETH staked in February 2021. StakeHound blamed the loss on security firm Fireblocks. Although Fireblocks did play a role, StakeHound’s failure to return the staked ETH represents a clear breach of duty, Celsius finds.
Celsius claims damages for performance delay
StakeHound’s breach is a delay in performance under Swiss law, which governs the case. The platform is consequently liable for damages. Celsius has claimed damages due to the delay in an amount to be determined by the court.
