Celsius Lawsuit Advances Against Tether Over Bitcoin Liquidation
A U.S. bankruptcy judge has authorized Celsius Network to go ahead with its multibillion-dollar litigation against stablecoin issuer Tether, which issues USDT. The ruling, which was rendered in a New York courtroom, dealt a heavy blow to the defendants in a case that arose from mayhem in the crypto market in 2022.
Court filings show Celsius alleging a “fire sale” of 39,500 Bitcoin by Tether in June 2022 after a margin call sparked by falling BTC prices. Tether allegedly used the sale proceeds of $812 million to repay Celsius’ debt without following the procedures set in their loan agreement.
Celsius claims that the sale breached the contract and the principle of “good faith and fair dealing” under British Virgin Islands law. The company also charges Tether with fraudulent and preferential transfers, and seeks to avoid such transfers in the U.S. Bankruptcy Code.
Celsius’s main complaint is Tether sold the Bitcoin 10 hours before the agreed waiting period was done. And Tether sold it for an average of $20,656, which is low compared to the market rates. Celsius estimates that today’s Bitcoin prices led to liquidation losses of more than $4 billion. In addition, it alleged that Tether transferred the money to accounts linked to Bitfinex, which raised further suspicion.
Although registered in the British Virgin Islands and Hong Kong, Celsius claims Tether conducted its affairs through U.S.-based people, money and communications, giving U.S. courts jurisdiction, according to Celsius.
Tether had requested the suit be entirely dismissed in August 2024 on the grounds that the U.S. court lacked jurisdiction and that the claims were baseless. The judge did dismiss a number of lesser counts, but the court upheld Celsius’s key allegations, including breach of contract, fraudulent transfer and preferential payment claims.
Following an 18-month-long restructuring, Celsius exited bankruptcy in January 2024—a few months before this ruling. The company is currently paying back its creditors, so the result of this lawsuit is particularly important for the company’s recovery.
Meanwhile, Tether remains well anchored in the crypto space. Tether CEO Paolo Ardoino recently shut the door on an IPO for the firm, contrary to speculation. He said Tether might be worth way more than $515 billion—its reserves of Bitcoin and gold are on the rise.
Tether recently became the majority owner of Jack Mallers’ Twenty One Capital, expanding its Bitcoin investment further. Nearly 37,230 Bitcoin ($3.9B) were transferred to the addresses associated with this platform, making this company one of the biggest corporate holders of Bitcoin globally.
Conclusion
The court’s ruling allowing Celsius’s lawsuit to proceed is a significant moment in one of the most well-known legal battles in the cryptocurrency industry. Celsius is seeking damages for what it says was an improper and costly liquidation of its bitcoin assets. This case could create new precedents regarding lender-borrower responsibilities. As billions are at stake and corporate trust is on the line, the lawsuit shows the growing legal scrutiny that even the most powerful forces in digital assets are undergoing.
