Celsius, the lending platform, has initiated a legal battle against StakeHound in an attempt to recover $150 million worth of ether (ETH), polygon (MATIC), and polkadot (DOT) tokens.
The lawsuit alleges that StakeHound failed to fulfill its obligations as a custodian and entrusted party, resulting in the loss of private keys and the refusal to return the tokens.
Celsius is seeking the return of its assets, compensatory damages, and reimbursement for legal fees associated with the case.
Celsius claims that in January 2021, it entrusted StakeHound with 25,000 native ETH valued at $47 million. Additionally, in February of the same year, Celsius entrusted StakeHound with 35,000 native ETH worth $65.9 million.
However, StakeHound’s third-party security provider reportedly lost the private keys associated with the 35,000 native ETH, leading to a dispute over the return of the tokens.
StakeHound’s Failure to Respond
According to Celsius, StakeHound claimed that due to the loss of the private keys, it was no longer obligated to return the 35,000 native ETH, and that it was also relieved of returning the 25,000 native ETH.
Celsius further alleges that StakeHound failed to respond to their demand for the return of 40 million MATIC tokens valued at $29.1 million and 66,000 DOT tokens worth $342,000.
In their lawsuit, Celsius argues that the tokens entrusted to StakeHound were meant to be locked until the activation of ETH withdrawals after the Shapella fork in April 2023.
Celsius asserts that StakeHound’s failure to return the tokens has resulted in losses exceeding $150 million.
The lawsuit seeks the return of Celsius’ assets, compensatory damages for contractual breaches, and reimbursement of legal fees incurred as a result of StakeHound’s alleged misconduct.
In late June, Celsius obtained court approval to convert tokens to BTC and ETH as part of its plan to compensate customers following its declaration of bankruptcy in July 2022.
The company aims to make its customers whole after a year of bankruptcy proceedings.