Celsius seeks return of $150 million from StakeHound platform

The Celsius Network, which is undergoing bankruptcy proceedings, accused обвинила LSD-platform StakeHound of breaching obligations regarding the placement of tokens totaling approximately $150.3 million.

The amount includes approximately $120 million in Ethereum, $30 million in Polygon, and $300,000 in Polkadot.

In addition to failing to return the tokens, the platform breached bankruptcy rules by initiating arbitration proceedings against the business in Switzerland, according to the document.

Lawyers expect not only the return of assets but also compensation for damages and legal fees.

In June 2021, StakeHound свернула its operations. According to Celsius’s lawyers, the platform refused to reverse-convert 35,000 so-called stTokens into Ethereum. 

Representatives of StakeHound cited the loss of private keys required to perform the operation. In June 2021, the firm accused Fireblocks, the custodian partner, of negligence, which led to this incident.

In April 2023, as part of StakeHound’s bankruptcy proceedings, it stated that there were no obligations to exchange stTokens for ETH owed to Celsius.

According to the lending platform’s lawyers, the initiation of arbitration violates Section 362 of the U.S. Bankruptcy Code. 

Known as «автоматическое приостановление» provision, it prevents creditors and other parties from collecting debts or filing lawsuits against the company that has declared bankruptcy.

Celsius accounted for more than 90% of StakeHound’s business, according to the document.

In April 2023, after the Shapella hard fork, holders of ETH locked in the Beacon Chain gained the ability to withdraw assets. StakeHound declined to confirm the unlocking of Celsius-owned coins.

In June 2022, Celsius suspended withdrawals, swaps, and transfers between accounts due to “extreme market conditions”.

In July, after filing for bankruptcy, Celsius reported a hole in its balance sheet of $1.2 billion. In August it emerged that the company’s liabilities exceeded its assets by $2.85 billion.

In May 2023, the platform transferred $74.3 million in Ethereum to the staking service Figment.

Thereafter Celsius moved stETH worth $776 million ahead of the launch of Lido Finance v2. Thereafter prepared altcoins worth about $74 million for conversion into Bitcoin and Ethereum as part of creditor settlements.