Celsius, a cryptocurrency lender, has filed a lawsuit against Tether, accusing it of misappropriating assets. The move comes amid the cryptocurrency company, which filed for bankruptcy in 2022,’s latest attempt to recover billions of dollars in funds for creditors.
Why is Celsius asking for over $3.5 billion from Tether?
Bankrupt company Celsius has filed a number of lawsuits against various cryptocurrency companies in recent weeks, with Tether, the world’s largest stablecoin, being the latest name on the list. Other companies currently embroiled in various legal battles with the now-defunct crypto lender include Badger DAO, Bancor, and Compound.
On Friday, August 9, Celsius filed its largest lawsuit against Tether, seeking billions of dollars in Bitcoin revenue, damages, and legal fees. According to the latest reports, Submit a request to the courtThe company wants to recover 39,542 BTC that it used as collateral for loans it took from Tether.
As Bitcoin’s price began to fall in early 2022, Tether allegedly demanded more collateral from Celsius to cover the loans. The latest court filing also revealed that the crypto lender had taken out an additional $300 million in USDT loans from Tether a few months before — and within 90 days — it filed for bankruptcy in July.
Celsius claimed to have responded to the additional collateral request, sending more BTC as collateral on several occasions between May and June 2022. Following this payment, Tether made a second collateral request but decided to liquidate Celsius’ collateral before the mandatory ten-hour waiting period.
In its lawsuit, Celsius alleges that Tether liquidated the collateral at a price that unfairly benefited the stablecoin issuer without allowing the lender to provide additional collateral. The court filing reads:
Had Celsius been given the opportunity to meet the demand for collateral—which it had the contractual right to do—it could have avoided dumping its Bitcoin at the bottom of the cryptocurrency market. Instead, this dump was carried out for the benefit of just one creditor: Tether.
According to the filing, Celsius is asking the court to order Tether to forfeit 15,658.21 BTC, 2,228.01 BTC, and 39,542.42 BTC that were preferentially transferred by the crypto lender to the stablecoin issuer. These transfers total 57,428.64 BTC, which is equivalent to about $3.5 billion at the current bitcoin price of $61,110.
Lawsuit Against Tether Labels for “Extortion”
In new Blog postTether has vehemently denied any wrongdoing against Celsius, calling its latest lawsuit “baseless.” According to the stablecoin company, Celsius failed to recognize the validity of an agreement made years before its bankruptcy.
Tether said in a blog post:
We look forward to responding in court to this fabricated and baseless attempt that will benefit no one but the lawyers, bankers and consultants involved in bringing this case.
Tether CEO Paolo Ardoino reiterated the company’s position in a post on the X platform, stating that they are ready to make an example of the brazen seizure of funds in court.
In 2022, Tether made USDt available to some of its clients — including Celsius. Tether’s arrangement with clients is quite simple: Tether provides USDt to selected clients who over-collateralize in Bitcoin.
If the price of Bitcoin (collateral) falls https://t.co/UuEs1ig8zr
– Paolo Ardoino 🤖🍐 (@paoloardoino) August 10, 2024
Finally, Ardoino wasted no time in pointing out Tether’s $12 billion combined equity and reassuring USDT holders that in the “most far-reaching scenario” where the lawsuit escalates, they will not be affected.
The price of Bitcoin on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from PYMNTS, chart from TradingView
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