Crypto lending platform, Celsius has made a move to recover approximately $150M worth of tokens from the liquid staking platform, StakeHound. Litigation costs hang in the balance as Celsius demands the reimbursement of 40 million MATIC, 66,000 DOT, 25,000 staked native ETH, and 35,000 ETH.
This story unfolds as Celsius had previously transferred these tokens to StakeHound, hence receiving “stTokens”, which they had the freedom to deploy on other investments or return to StakeHound in exchange for their original tokens. Controversy arose when StakeHound rebutted that they were not obliged to exchange native ETH for stTokens when they were accused of breaching their contractual duty to Celsius.
In Celsius’ perspective, StakeHound’s call for arbitration is in direct violation of section 362 of the United States Bankruptcy Code also known as the “automatic stay” rule. This is a critical regulation that protects creditors, barring them from pursuing legal action or seeking debt recovery from a company or individual after filing for bankruptcy.
Celsius also sought to make StakeHound surrender Celsius’ property promptly, and remit compensation for damages resulting from StakeHound’s alleged contractual breaches. Together with these, last year, StakeHound reportedly lost the private keys of around 38,000 ETH, including 35,000 ETH belonging to Celsius hence claiming it has been freed of its obligation to reimburse these tokens
While these events unfold, it should be noted that Celsius had filed for bankruptcy nearly a year ago, and since then, it has been working on restructuring. In February, Celsius proposed a restructuring strategy that revolved around the creation of a public platform owned by Earn creators, to be supported by NovaWulf, a digital asset investment entity.
It is valuable to recognize, regulate, and responsibly manage the risks that come with blockchain technology and its deployment. This implied in crypto lending platforms interacting with other outfits and during token exchanges. Operators should advance transparency and precision in deal-making to ensure that instances of alleged breaches of trust are minimized if not fully eliminated. Regulatory frameworks should also be revisited to ensure robust enforcement and compliance, to protect not just the operators in the field but also the investors. Despite these hitches, the crypto sector’s transformative value in the financial world remains potent.
Source: Cointelegraph
