Celsius sues StakeHound to recoup $150M MATIC, ETH and DOT

Bankrupt lender Celsius is demanding liquid staking startup StakeHound return large sums of ether, polkadot and polygon

article-image

Celsius’ Alex Mashinsky | Kevin McGovern/Shutterstock.com modified by Blockworks

share

Celsius is suing StakeHound to recover $150 million in ether (ETH), polygon (MATIC) and polkadot (DOT).

The lender, which declared bankruptcy in July last year, claims StakeHound was entrusted with 25,000 native ETH ($47 million) in January 2021, and 35,000 native ETH ($65.9 million) in February of that same year.

However, StakeHound’s third-party security provider allegedly lost the private keys associated with the 35,000 native ETH from February. 

StakeHound allegedly claimed that “because keys associated with the 35,000 Celsius ETH (plus Rewards) had been misplaced, StakeHound not only was relieved of its obligation to return those tokens, StakeHound also was no longer required to return the 25,000 Celsius ETH (plus Rewards) in their entirety.”

Two years earlier, Celsius entrusted StakeHound with 40 million MATIC ($29.1 million) as well 66,000 DOT ($342,000). StakeHound, in return, issued customers “stTokens.”

In their recent filing, Celsius lawyers maintain the tokens were only locked until the Shapella fork activated ETH withdrawals earlier this year. “The staked native ETH tokens were locked and unavailable for withdrawal by anyone until the occurrence of a long-awaited ‘upgrade’ to the Ethereum blockchain, an event which happened on or around April 12, 2023.”

As for the MATIC and DOT, Celsius allegedly demanded StakeHound return the native tokens in May of this year “in exchange for the corresponding stTokens issued by StakeHound. However, StakeHound never responded to the letter and the tokens that it failed to return are now ‘worth at least in excess of $150 million.'”

“StakeHound should be required to immediately turn over Celsius’ property, pay compensatory damages arising from its breaches of contractual and other duties, and damages, sanctions and attorneys’ fees associated with StakeHound’s wilful misconduct,” the lawsuit said.

In late June, Celsius received court approval to convert tokens to BTC and ETH, with plans to make customers whole following a year of bankruptcy proceedings.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Vertex.jpg

Research

The proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains. Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances. Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.

article-image

Partnering with EtherFi and Angle, the fully on-chain perp DEX features bespoke collateral

article-image

Sponsored

Gavin Wood introduced the next evolutionary step for the Polkadot network: the Join-Accumulate Machine, or JAM

article-image

The side events were the places to be at Consensus 2024, according to attendees

article-image

Also, who’s come out swinging in the spot ether ETF fee war — and who could undercut them

article-image

I know it is not in their nature, but US regulators could learn a lot by researching the digital asset frameworks that overseas regulators have already gotten right

article-image

Also, the ETF hype train can count out at least one member