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Bankrupt Bitcoin (BTC) mining company Core Scientific is opposing the payment of a $4.7 million administrative lawsuit brought by cryptocurrency lender Celsius Network, leading to a battle between the firms over contractual obligations.
According to an objection that was filed in Texas Bankruptcy Court on May 5, Core Scientific asked to dismiss Celsius Network’s $4.7 million administrative lawsuits because the firm could not prove it was entitled to them.
“Celsius’s request for clearance and immediate payment of Celsius’ alleged administrative claim ignores the fact that Core has material claims against Celsius that Core believes exceed Celsius’s alleged administrative claim,” the objection says.
For context, Core first signed a contract with Celsius in 2020 to host its cryptocurrency assets in Core’s data centers. However, due to an increase in the price of electricity, Core passed these additional costs on to Celsius, which was reportedly included in the original contract.
Despite Celsius initially paying for those costs, the cryptocurrency lender stopped payments after it filed for bankruptcy, Core Scientific said in an objection.
“If anyone got rich unjustly here, it’s Celsius,” Core Scientific wrote in the objection. According to the now-defunct Bitcoin miner, Celsius is “sitting on nearly $8 million it owes Core” due to “an egregious post-petition violation” of the agreed dispute resolution mechanism.
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In total, Celsius now allegedly owes Core Scientific about $11 million, an amount that is accruing an additional $28,000 in fees and interest every day, lawyers for the Bitcoin mining firm say.
The conflict between the two firms has been raging since Oct. 19, when Core Scientific first accused Celsius of failing to pay its electricity bills, citing non-payments as a major factor in the liquidity problems that led the bitcoin miner to file for Chapter 11 bankruptcy on Dec. 21.
“The millions of dollars that Celsius lost to Core after Celsius filed for bankruptcy, plus the millions of dollars in litigation … contributed significantly to Core’s liquidity drain and eventual Chapter 11 filing.”
On Dec. 28, Core Scientific filed a motion to allow Celsius’ contracts to be denied, arguing that the firm’s failure to pay electricity bills constituted a material breach of contract. On Jan. 3, Celsius allowed Core Scientific to shut down more than 37,000 Bitcoin mining rigs that the miner hosted for a cryptocurrency lender.
