Core Scientific, a bankrupt Bitcoin (BTC) mining outfit, has objected to paying a $4.7 million administrative claim made by crypto lender Celsius Network, sparking a legal dispute between the two companies.
According to the objection, which was filed in Texas bankruptcy court on May 5, Core Scientific has requested that Celsius Network’s $4.7 million administrative claims be denied since the company cannot demonstrate that it is entitled to one.
“Celsius’ request for allowance and immediate payment of the Celsius alleged admin claim ignores the fact that Core has substantial claims against Celsius, which Core believes exceed the Celsius alleged admin claim,” the objection stated.
For perspective, Core first agreed to host Celsius’s bitcoin assets in Core’s data centers in 2020. However, due to a rise in the cost of electricity, Core passed these additional charges on to Celsius, a provision that was supposedly stated in the original contract.
Celsius Network has signed a contract with Core Scientific for 2020. Court filing is the source.
Despite originally paying these charges, Celsius discontinued payments after declaring bankruptcy, according to Core Scientific’s protest. “If anyone has been unjustly enriched here, it is Celsius,” wrote Core Scientific in their protest. Celsius has been “sitting on nearly $8 million of money it owes to Core,” according to the now-defunct Bitcoin miner, due to a “blatant post-petition violation” of the agreed-upon dispute resolution procedure.
Celsius now allegedly owes Core Scientific about $11 million, with an additional $28,000 in fees and interest accruing with each passing day, according to the Bitcoin mining firm’s lawyers.
The two companies have been at odds since Oct. 19, when Core Scientific accused Celsius of failing to pay its electricity bills, citing the non-payments as a crucial factor in the struggling Bitcoin miner’s filing for Chapter 11 bankruptcy on Dec. 21.
“The millions of dollars Celsius underpaid Core after its bankruptcy filing, as well as the millions of dollars in litigation…significantly contributed to Core’s liquidity drain and eventual chapter 11 filing.”
Core Scientific filed a move on December 28 seeking authorisation to reject Celsius’ contracts, stating that the company’s refusal to pay its electricity bills constituted a substantial breach of contract. On January 3, Celsius agreed to allow Core Scientific to shut down over 37,000 Bitcoin mining rigs that the miner was hosting for the cryptocurrency lender.