Tether Reaches $299.5 Million Settlement in Celsius Bankruptcy Case
Tether, the stablecoin leader, has settled with Celsius Network bankruptcy estate for $299.5 million. This settlement marks the official closure of a multi-year dispute relating to the fallout of Celsius Network in 2022. The settlement could have a major impact on stablecoin liability in the cryptocurrency world, according to the Blockchain Recovery Investment Consortium (BRIC).
In early 2023, BRIC was established to utilize their expertise to maximize the creditor recoveries from bankrupt digital-asset platforms. They were appointed by the debtors of Celsius and the Unsecured Creditors’ Committee as asset recovery manager and litigation administrator in January 2024.
Background of the Tether-Celsius Dispute
Celsius Network accused Tether of illegally selling Bitcoin used for USDt loans. The complaint states that Tether sold Celsius’s collateral when the price of Bitcoin was near the amount Celsius owed, which caused Celsius to be wiped out and become insolvent.
The $299.5 million settlement is only part of the $4 billion in claims Celsius originally sought. The ongoing lawsuit against Tether may not end soon but creditors have recovered over $500 million. This could impact the future of stablecoin regulations.
The development suggests that stablecoin companies may be on the hook for legal action that results from counterparty risk in distressed crypto markets, raising questions over how regulators and courts will define responsibility in insolvencies to come.
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Consequences for the Stablecoin Sector
In the past, Tether and other stablecoin issuers have said that they are only offering a service for people to create and destroy tokens. According to them, this means they don’t have any liability for anything that happens downstream. However, the settlement may lead the industry to rethink its operational safeguards and compliance processes, especially for higher-risk use cases that include lending platforms and exchanges.
According to analysts, the settlement of Tether and Celsius shows that there can be accountability of issuers at times of distress.
Background of the Cryptocurrency Crash – 2022
Celsius Network went bankrupt in 2022. This was not an isolated event. Other companies went bankrupt that year too, including BlockFi, Voyager Digital, and later Genesis Global Capital. The bankruptcy of these companies plunged the crypto market into a protracted bear cycle. It also led to the eventual collapse of FTX.
Celsius Network’s ex-CEO, Alex Mashinsky, agreed in June 2025 to claim nothing from the bankruptcy estate and has been sentenced to 12 years in prison for a pair of felony counts and reported himself to prison in September.
Customers took off nearly $13 billion from crypto platforms from May to November 2022 amid a loss of faith in lenders, per the Federal Reserve Bank of Chicago. Investors were drawn to high-yielding products that offered interest rates greater than 17%, but it was not sustainable when prices fell.
