Overview:
Tether has pledged to fiercely defend itself against a $3.3 billion lawsuit brought by bankrupt crypto lender Celsius, which Tether has labeled a “shakedown.” The legal battle centers on a loan agreement between the two companies, with Celsius demanding the return of over 57,000 bitcoins.
On Friday, Celsius filed a request with the U.S. Bankruptcy Court of the Southern District of New York, seeking an order for Tether to relinquish 57,428.64 bitcoins (BTC) or to award the present value of the bitcoin, totaling approximately $3.3 billion at current prices.
The lawsuit stems from a loan agreement under which Celsius borrowed stablecoins from Tether to support its business operations. According to Celsius, as the crypto market crashed in mid-2022, Tether engaged in “preferential and fraudulent transfers” to protect its position before Celsius declared bankruptcy. The suit claims that Tether demanded and received additional collateral from Celsius during this period, actions that Celsius argues were improper and financially damaging.
Tether has categorically denied the allegations, describing the lawsuit as baseless. In a statement on its website, Tether clarified that the bitcoins in question were liquidated at Celsius’ direction and with their consent during the market downturn in June 2022.
“This lawsuit incredibly now seeks the return of approximately $2.4 billion worth of BTC from Tether, despite the BTC being liquidated at Celsius’ direction and with Celsius’ consent at June 2022 prices,” Tether stated, though it did not elaborate on how the $2.4 billion figure was calculated.
Tether’s CEO, Paolo Ardoino, further commented on X (formerly Twitter), stating, “There are plenty of flaws in the claimant’s filing, and we’re very confident in the solidity of our contract and our actions… This lawsuit will be fought till the end. It’s important to set an example on behalf of the entire industry that shameless money grabs will not work.”
Celsius argues that Tether’s actions during the market crash were unfairly advantageous. The lawsuit claims that in June 2022, Tether applied Celsius’s bitcoin against its obligations at an average price of $20,656.88 per bitcoin, which was lower than the market closing price of $22,487.39 on June 13th. Celsius contends that these transfers were fraudulent and seeks to recover the bitcoin or its equivalent value for the benefit of its estate. Additionally, Celsius is demanding $100 million in damages for alleged breaches of contract.
Despite the lawsuit’s claims, Tether has assured its token holders that even in the unlikely event the lawsuit is successful, there will be no impact on USDT holders. As of June 30, Tether reported nearly $12 billion in consolidated equity, underscoring its financial stability.
Conclusion:
As Tether gears up for a protracted legal fight, the outcome of this lawsuit could have significant repercussions for both companies and the wider crypto industry. The case will be closely watched as it unfolds, potentially setting a precedent for how similar disputes are handled in the future.
