Celsius Network Loses Keys to 35K Ethereum Tokens in Stakehound

Paigambar Mohan Raj
Source: Bitcoinist

Stakehound, an Eth2 staking service provider, reported on June 22nd, 2021 that they had misplaced the keys to over 38,000 Ethereum tokens that they had deposited on behalf of clients. The loss was detected on May 2nd, 2021, but the corporation stayed silent while attempting to regain the key. Stakehound blamed the loss on its custody provider, Fireblocks, and filed a lawsuit against the company in an Israeli court. The problem has yet to be rectified. Meanwhile, customers are stuck with the Stakehound stETH token, which is currently nearly worthless.

Source: Dirty Bubble Media

On February 2nd, 2021, Celsius Network sent 35,000 Ether to Stakehound in a single transaction, according to Dirty Bubble Media. They suspect Celsius moved more Ether through Stakehound since known Celsius wallets have at least 42,306 Stakehound staked Ethereum, making them the largest owner of the almost worthless coin. This is a loss of almost $71 million according to Ethereum prices as of today.

According to Dirty Bubble Media, this is the first time Celsius’ involvement in the Stakehound fiasco has been revealed. Up until now, the corporation has chosen to keep this information from its consumers for more than a year. Many have not taken lightly to the situation.

One user even questioned Dirty Bubble Media, if they have spoken to anyone from the team regarding the lost Ethereum, including CEO Alex Mashinsky. To this, @MikeBurgersburg replied that they have been blocked by the top management of the company.

Bitfinexed, a Twitter handle committed to the exposure of Bitfinex and Tether as a fraud, put out a thread of tweets informing its 81.4K followers about how companies lie when they are caught losing investors’ capital.

The Twitter user says that Bitfinex would not inform people if some of their bank accounts were suddenly seized, but would prefer to lie to the public. The lost staked Ethereum has riled up a lot of angry investors. As an industry that prides itself on transparency, Celsius sure does not seem to live up to its name.