Core Scientific, a bankrupt Bitcoin (BTC) mining company, has refused to pay out a $4.7 million administrative claim made by crypto lender Celsius Network, sparking a legal battle between the two companies.
According to the objection, filed in Texas bankruptcy court on May 5, Core Scientific has requested that Celsius Network’s $4.7 million administrative claim be dismissed because the company was unable to show it was entitled to one.
“Celsius’ request for alimony and immediate payment of the Celsius admins’ alleged claims ignores the fact that Core has substantial claims against Celsius, which Core believes exceeds the Celsius admins claims,” the objection stated.
As a perspective, Core first agreed to host the Celsius bitcoin asset in Core’s data center in 2020. However, due to rising electricity costs, Core charged this additional fee to Celsius, a provision that should have been stated in the original contract.
Celsius Network has signed a contract with Core Scientific for 2020. Court filings are the source.
Despite initially paying these fees, Celsius halted payments after declaring bankruptcy, according to a protest by Core Scientific. “If anyone is unfairly enriched here, it is Celsius,” wrote Core Scientific in their protest. Celsius had “got nearly $8 million in money he owed Core,” according to the now defunct Bitcoin miner, due to “blatant post-petition violations” of agreed dispute resolution procedures.
Celsius now allegedly owes Core Scientific about $11 million, with an additional $28,000 in fees and interest accruing daily, according to lawyers for the Bitcoin mining company.
The two companies have been at odds since October 19, when Core Scientific accused Celsius of defaulting on its electricity bill, citing non-payment as a significant factor in the struggling Bitcoin miner’s filing for Chapter 11 bankruptcy on December 21.
“Millions of dollars Celsius underpaid Core after its bankruptcy filing, as well as millions of dollars in litigation… significantly contributed to the drain on Core’s liquidity and eventual chapter 11 filing.”
Core Scientific filed a move on December 28 seeking authorization to deny Celsius’ contract, alleging that the company’s refusal to pay its electricity bill constitutes a substantial breach of contract. On January 3, Celsius agreed to allow Core Scientific to shut down more than 37,000 miner-hosted Bitcoin mining rigs for cryptocurrency lenders.