Celsius Sues Tether, Demanding $2.4 Billion Over BTC Liquidation!

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Celsius Sues Tether, Demanding $2.4 Billion Over BTC Liquidation!
Image source altcoindaily

The cryptocurrency industry has seen its fair share of legal battles, and the latest high-profile crypto industry dispute involves the embattled Celsius crypto lender and the leading stablecoin issuer Tether crypto. In a surprising turn of events, Celsius sues Tether in U.S. Bankruptcy Court, alleging misappropriation of assets and seeking approximately $2.4 billion in BTC returns, damages, and legal fees. This legal showdown sheds light on the complex and often contentious relationships within the crypto ecosystem.

Celsius’ Allegations Against Tether

According to the lawsuit filed by Celsius, the two parties had entered into a loan agreement in 2022, where Tether provided Celsius with a specific amount of USDT stablecoin in exchange for 39,542.42 BTC as Bitcoin collateral. As the price of Bitcoin began to drop, Celsius was required to provide additional collateral to avoid liquidation and meet margin requirements, as per the contractual obligations of the agreement.

Celsius claims that Tether liquidated the BTC collateral at a price point that almost exactly covered the debt, without giving Celsius the opportunity to provide the additional collateral. The lawsuit alleges that Tether’s actions were in violation of their contract and resulted in significant losses for Celsius, contributing to its financial turmoil. Celsius is seeking restitution for its creditors through this legal action.

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Tether’s Response: A “Shakedown” Attempt

Celsius Sues Tether
celsius sues tether, demanding $2.4 billion over btc liquidation!

Tether, on the other hand, has vehemently denied any wrongdoing and has labeled the lawsuit a “shakedown” attempt by Celsius. The company maintains that it was Celsius that requested the selloff of the BTC collateral after choosing not to provide the additional collateral as required by the agreement.

In a blog post, Tether CTO Paolo Ardoino stated that “when Celsius chose not to post additional BTC it directed Tether to liquidate the BTC collateral Tether held in order to close out its roughly 815 million USD₮ position with Tether.” Tether has also emphasized its strong financial position, with nearly $12 billion in consolidated equity, to reassure USDT holders that they would not be impacted even if the “baseless lawsuit” were to progress.

Interesting Read: Chinese Govt moves $2B worth of Seized ETH from Plus Token Ponzi scheme

Celsius Sues Tether: Disputed Damages Amount

The exact amount Celsius is seeking in the lawsuit appears to be a point of contention. While Tether has cited the figure of $2.4 billion, which accounts for the 39,542.42 BTC, the legal filing shows that Celsius is also seeking the return of two other BTC transfers made during the same period, which it claims were fraudulent transfers or preferential transfers.

In total, Celsius is reportedly seeking the relinquishment of 57,428.64 BTC, which at the current market price of $60,627 per BTC, amounts to approximately $3.48 billion. Additionally, the lawsuit seeks no less than $100 million in damages, plus additional damages to be determined at trial, and legal fees.

Celsius Broader Legal Offensive

The lawsuit against Tether is just one of several legal actions taken by Celsius in recent weeks. The bankrupt crypto lender has also filed suits against other crypto entities, including Badger DAO, Compound, and Bancor DAO, among others.

These lawsuits target a variety of issues, from alleged mismanagement leading to losses to the improper handling of collateral and liquidations. Celsius appears to be leaving no stone unturned in its efforts to claw back funds for its creditors, even if it means taking on some of the industry’s biggest players.

The Implications for the Crypto Industry

The Celsius-Tether legal battle has far-reaching implications for the broader cryptocurrency industry. The outcome of this case could set important precedents regarding the responsibilities and obligations of crypto lenders, stablecoin issuers, and other key players in the ecosystem.

Moreover, the lawsuit highlights the inherent risks and complexities involved in the rapidly evolving crypto landscape. As the industry continues to mature, the need for robust regulatory frameworks and transparent, accountable market practices becomes increasingly evident.

Tether’s Defensive Stance

Tether has made it clear that it will “vigorously defend” itself against the “unwarranted allegations” made by Celsius. The company has emphasized its strong financial position and has expressed confidence in its ability to prevail in the litigation.

However, the lawsuit has the potential to put Tether’s operations and reputation under intense scrutiny. As the world’s largest stablecoin issuer, Tether’s actions and practices are closely watched, and any perceived missteps could have far-reaching consequences for the entire cryptocurrency market and stablecoin security.

Celsius’ Bankruptcy Proceedings

It’s worth noting that the Celsius lawsuit against Tether is just one aspect of the broader Celsius bankruptcy case. The crypto lender filed for Chapter 11 bankruptcy in July 2022, and its restructuring efforts have been closely watched by the industry.

As part of its bankruptcy proceedings, Celsius has already settled with one of its former executives, Jason Stone, and has been working with the Blockchain Recovery Investment Consortium to liquidate various tokens and non-fungible tokens (NFTs) to distribute funds to its creditors. The Tether lawsuit represents a significant additional step in Celsius’ efforts to recover assets and maximize the recovery for its stakeholders.

Conclusion

The legal showdown happening because of Celsius sues Tether, is a complex and multifaceted issue that underscores the challenges facing the cryptocurrency industry. As the two companies battle it out in court, the wider crypto community will be closely monitoring the case for its potential implications on the industry’s future.

Ultimately, this dispute highlights the need for greater transparency, accountability, and regulatory oversight within the crypto space. By addressing these issues, the industry can work towards building a more robust and trustworthy ecosystem, one that can fulfill its promise of financial innovation and inclusivity.

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