Celsius Seeks $3.5 Billion from Tether in New Lawsuit
On August 9, 2024, through the Blockchain Recovery Investment Consortium, Celsius Network initiated legal action against Tether and its affiliates in the United States Bankruptcy Court for the Southern District of New York. Celsius claims this lawsuit involves approximately $3.5 billion, but Tether has firmly dismissed it as meritless.
Tether Will Defend Itself Against “Shake Down” Litigation Commenced by Celsius Learn more: https://t.co/6qjXD84EXh
Celsius’s lawsuit accuses Tether of mishandling Bitcoin collateral. According to the filing, Tether liquidated Celsius’s Bitcoin holdings at a crucial moment, leading to a claim for $2.4 billion worth of Bitcoin and additional damages. The court documents reveal that Celsius demands 57,428.64 BTC or its equivalent in US dollars, along with damages and legal fees. This figure contrasts with Tether’s reported value of approximately $2.4 billion.
The dispute traces back to a 2022 agreement where Tether provided USD₮ to Celsius, which pledged Bitcoin as collateral. As Bitcoin’s value dropped, Celsius was required to supply more collateral to avoid liquidation. Celsius allegedly failed to do so, instructing Tether to sell off the Bitcoin to cover its position.
Tether’s Defence
Tether has vehemently denied the allegations. The company described the lawsuit as a “shake down” and argued that Celsius’s claims are unfounded. Tether contends that it acted within the terms of the agreement, which allowed liquidation if additional collateral was not provided. The company’s blog post emphasised its intention to “vigorously defend” itself, citing a robust consolidated equity of nearly $12 billion as of June 30, 2024, to reassure its stakeholders.
Paolo Ardoino, Tether’sCEO, underscored that the company’s risk management practices are solid, asserting that Celsius’s claim misrepresents the facts. He reiterated that Tether’s actions were transparent and justified under the contractual terms.
In 2022, Tether made available USDt to some of its customers – including Celsius. Tether's arrangements with customers are very simple: Tether provides USDt to selected customers who provide an overcollateralization in Bitcoin.
Tether’s response highlights its confidence in prevailing against the lawsuit. The company believes that even if the suit were to progress, it would not affect Tether token holders. This assurance aims to bolster confidence among its users amidst ongoing legal challenges.
Celsius’s legal team, meanwhile, remains committed to their case, arguing that Tether’s liquidation of the Bitcoin was improper. The discrepancy between Celsius’s claims and Tether’s defence will likely be central to the court proceedings.
Conclusion
The ongoing lawsuit between Celsius and Tether underscores the complexities of cryptocurrency collateral agreements and legal disputes. With Tether’s strong defence and significant equity backing, the crypto community will closely watch the outcome of the lawsuit. Both parties have expressed confidence in their positions, suggesting a protracted legal battle ahead.
