Bankruptcy Battle: Core Scientific Challenges Celsius Network’s $4.7M Claim & Contract Debacle

Intricate boardroom scene, dimly lit, intense legal discussion, baroque-inspired style, contrasting shadows and light, tense atmosphere, prominent paperwork piles, two business representatives with determined expressions, an arbitrator mediating, imagery of mining rigs and cryptocurrency symbols subtly woven into background, muted yet rich color palette, sense of urgency and conflict.

Bankrupt Bitcoin (BTC) mining firm Core Scientific has raised objections against crypto lender Celsius Network, challenging the company’s $4.7 million administrative claim amidst a clash over contractual obligations. Core Scientific has requested the court to reject Celsius Network’s claim, arguing that the crypto lender cannot substantiate its entitlement to such amount.

Core Scientific has emphasized in their objection that they possess significant claims against Celsius, which they believe to surpass the administrative claim. To provide some background, the two companies entered into a contract in 2020, with Core agreeing to host Celsius’s cryptocurrency holdings within its data centers. Owing to subsequent rises in power costs, Core transferred the extra charges to Celsius, a provision allegedly included in the initial agreement.

While Celsius initially complied with the added expenses, the crypto lender ceased payments following its bankruptcy filing, as per Core Scientific’s objection. Core questions the motives of Celsius, stating that if there has been any unjust enrichment, it lies with the crypto lending platform. The defunct Bitcoin miner accuses Celsius of infringing upon the pre-agreed dispute resolution mechanism and owing Core nearly $8 million as a result.

Adding fuel to the fire, Core Scientific’s lawyers argue that Celsius now owes the Bitcoin mining firm around $11 million, a sum that accumulates an extra $28,000 in fees and interest daily. The contentious dispute between the firms dates back to October 19, when Core first accused Celsius of neglecting to pay its power bills – an issue that allegedly contributed significantly to Core’s liquidity troubles and eventual Chapter 11 bankruptcy filing on December 21.

In response, Core filed a motion on December 28 seeking approval to discard Celsius’s contracts, asserting that the company’s failure to cover its energy costs constituted a severe breach of contract. On January 3, Celsius allowed Core to shut down more than 37,000 Bitcoin mining rigs that the mining company had been hosting on behalf of the crypto lender.

Ultimately, the standoff between these two titans highlights a broader issue in the crypto and blockchain industry – the need to ensure that contractual relationships remain clear, transparent, and uncompromised, so that disputes don’t have cascading financial implications for both parties involved. As the sector continues to evolve, companies must exercise caution in structuring agreements and keeping communication lines open to avoid similar predicaments in the future.

Source: Cointelegraph

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