In a significant legal move, Celsius Network has filed a lawsuit against Tether, seeking approximately $2.4 billion in Bitcoin restitution. The lawsuit, lodged in the U.S. Bankruptcy Court for the Southern District of New York, accuses Tether of improperly liquidating Celsius’s Bitcoin collateral during a critical period leading up to the crypto lender’s bankruptcy in July 2022.
Celsius alleges that Tether breached their loan agreement by conducting what it describes as “fraudulent” and “preferential” transfers of Bitcoin. According to the complaint, Tether liquidated over 39,500 Bitcoin, which Celsius had posted as collateral, without adhering to the agreed-upon terms. Celsius claims that Tether’s actions not only violated their contract but also unfairly improved Tether’s position as a creditor at the expense of other creditors during Celsius’s financial turmoil.
Tether, the issuer of the USDT stablecoin, has swiftly responded to the allegations, labeling the lawsuit a “shakedown” and asserting that it acted within its rights. Tether’s CEO, Paolo Ardoino, emphasized that Celsius had instructed Tether to liquidate the Bitcoin collateral when its value fell below the required margin. Ardoino stated that Tether’s actions were in line with standard risk management practices and that the lawsuit misrepresents the events leading to Celsius’s collapse.
In their defense, Tether has vowed to vigorously contest the lawsuit, arguing that it is based on a misunderstanding of the contractual obligations and market practices governing such transactions. Ardoino reassured USDT holders that Tether’s strong financial position, with nearly $12 billion in equity, would protect them from any adverse effects stemming from the lawsuit.
As the legal battle unfolds, the crypto community watches closely, recognizing the implications this case could have for both companies and the broader cryptocurrency market.
