TLDR
- Celsius Network has filed a lawsuit against Tether, seeking approximately $3.5 billion in Bitcoin returns, damages, and legal fees.
- The lawsuit alleges that Tether improperly liquidated Celsius’ Bitcoin collateral without giving the required time to provide additional funds.
- Tether denies wrongdoing, calling the lawsuit a “shakedown” and “baseless,” vowing to defend itself in court.
- Celsius claims Tether liquidated 39,542.42 BTC at a price that just covered the debt, without allowing the opportunity to provide more collateral.
- This lawsuit is part of a series of legal actions by Celsius against various crypto companies in an attempt to recover funds for creditors.
Bankrupt crypto lender Celsius Network has filed a lawsuit against Tether, the company behind the world’s largest stablecoin, USDT.
The lawsuit, filed on August 9 in the U.S. Bankruptcy Court for the Southern District of New York, seeks approximately $3.5 billion in Bitcoin returns, damages, and legal fees.
- At the heart of the dispute is 57,428.64 Bitcoin that Celsius claims Tether improperly liquidated.
- According to the lawsuit, Celsius had provided 39,542.42 BTC as collateral for loans from Tether.
- As Bitcoin prices dropped in early 2022,
- Tether requested additional collateral to secure the loans.
- Celsius alleges that after it satisfied an initial request for extra collateral,
- Tether made a second demand but proceeded to liquidate the entire collateral within hours, without providing the contractually agreed 10-hour timeframe for Celsius to meet the demand.
Celsius argues that if given the full time allotted by the contract, it could have avoided the disposition of its Bitcoin “at near the bottom of the cryptocurrency market.”
The lawsuit claims that Tether sold the Bitcoin at an average price of $20,656.88, which Celsius contends was “considerably below Bitcoin’s low price of $22,808 on Bitfinex,” a crypto exchange controlled by Tether’s parent company.
Tether has vehemently denied any wrongdoing, labeling the lawsuit as a “shakedown” and “baseless.”
In a blog post responding to the allegations, Tether stated, “No good deed goes unpunished,” and vowed to “vigorously defend” itself against what it calls “unwarranted allegations.”
The stablecoin issuer insists it acted within the terms of a 2022 agreement that required Celsius to post additional Bitcoin as collateral when prices fell.
According to Tether, when Celsius chose not to post additional BTC, it directed Tether to liquidate the collateral to close out its roughly 815 million USDT position.
Tether CEO Paolo Ardoino echoed this sentiment on social media, stating, “There are plenty of flaws in the claimant’s filing and we’re very confident in the solidity of our contract and our actions.”
This lawsuit is part of a broader effort by Celsius to recover funds for its creditors following its bankruptcy filing in July 2022. The crypto lender has filed several other lawsuits against various crypto companies, including Badger DAO, Compound Labs, and Bancor DAO, alleging losses due to hacks, oracle incidents, and other issues.
The Celsius bankruptcy has been one of the most high-profile collapses in the crypto industry, leaving the company with $5.5 billion in liabilities against $4.3 billion in assets.
The company’s former CEO, Alex Mashinsky, has faced federal criminal charges and civil lawsuits in the wake of the collapse.
As the legal battle unfolds, both Celsius and Tether are standing firm in their positions. Celsius sees this lawsuit as a necessary step to recover funds for its creditors, while Tether maintains that it acted in accordance with its agreement and the instructions provided by Celsius at the time.
