Bankrupt Crypto Lender Celsius Sues StakeHound for Withholding $150 Million in Tokens

Celsius Files Lawsuit Against StakeHound for Withholding Tokens

Celsius, the bankrupt crypto lender, has filed a lawsuit against StakeHound for allegedly withholding $150 million worth of tokens, including ETH, MATIC, and DOT. Court filings reveal that Celsius entrusted these tokens to StakeHound’s liquid staking tokens back in 2021. However, StakeHound has hit back with an arbitration proceeding, claiming it is not obligated to exchange the stTokens for other tokens as it has misplaced the keys.

Main Breakdowns:

Celsius claims StakeHound wrongfully withheld native tokens, depriving them of assets.
Celsius warned StakeHound to block any attempts to seize ETH tokens belonging to Celsius.
Celsius demands return of native tokens, damages, attorney fees, and interest.
StakeHound blames Fireblocks for the losses.
Celsius’ bankruptcy court concluded that customer assets belong to Celsius Estate.

StakeHound Blames Fireblocks for Losses

StakeHound has blamed blockchain security service provider Fireblocks for the losses. StakeHound previously sued Fireblocks for the loss of $70 million in Ethereum. StakeHound claims that a Fireblocks employee’s negligence led to the loss. However, Celsius argues that the Fireblocks issue does not excuse StakeHound from returning the holdings.

Celsius Earn Program Assets

The bankruptcy court overseeing Celsius’ Chapter 11 case determined that a significant portion of customer assets held by Celsius belongs to the Celsius Estate. These assets were part of Celsius’ Earn program, which offered interest returns to users. The court found that Celsius used these assets to generate investment returns.

Hot Take:

The lawsuit between Celsius and StakeHound highlights the challenges and disputes that can arise in the crypto lending industry. With substantial amounts of tokens at stake, the legal battle could have significant implications for both parties involved. It also underscores the importance of secure storage of private keys and the potential risks associated with third-party service providers.