Celsius Sues StakeHound for Failing to Return $150M Worth of Tokens

Bankrupt crypto lender Celsius is suing liquid staking platform StakeHound over the platform’s alleged failure to return $150 million worth of ether (ETH), Polygon’s MATIC, Polkadot’s DOT, and other tokens.

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. Celsius exchanged the tokens, which were valued at over $150 million, for StakeHound’s liquid staking “stTokens,” according to the filings.

A court docket filed in U.S. Bankruptcy Court for the Southern District of New York alleges that StakeHound filed an arbitration agreement against Celsius in Switzerland after the lender’s bankruptcy.

In the Switzerland filing, StakeHound argued that it has “no obligation” to exchange the stTokens for other tokens. StakeHound also says it lost the keys associated with 35,000 Celsius ETH, and is relieved of its obligation to return these tokens.

Celsius says the filing of the arbitration is in violation of Section 362 of the United States Bankruptcy Code. Section 362 of the U.S. Bankruptcy Code, also known as the “automatic stay,” is a rule that stops most creditors from trying to collect debts or take legal action against a person or company as soon as they file for bankruptcy.

StakeHound blamed Fireblocks for the loss, and launched a suit against the custody provider in 2021. Celsius says that StakeHound’s relationship with Fireblocks does not change its obligations to return the tokens owed.