Key Points
- Celsius Network, a bankrupt cryptocurrency lending platform, has filed a lawsuit against Tether, seeking the return of approximately 57,428.64 BTC (valued at approximately $3.48 billion at the time of writing) plus damages and legal fees.
- Tether denies the allegations, describing the lawsuit as “baseless” and a “shakedown.” It states that Celsius directed the liquidation of its Bitcoin collateral to close out its position.
In a significant development in the cryptocurrency world, Celsius Network has filed a lawsuit against Tether, the company behind the popular USDT stablecoin. The lawsuit, filed on August 9, 2024, in the United States Bankruptcy Court for the Southern District of New York, seeks the return of approximately 57,428.64 Bitcoin (BTC), valued at about $3.48 billion as of August 11, along with damages and legal fees.
The Origins of the Dispute
According to Celsius, it borrowed USDT from Tether for $ 39,542.42 BTC as collateral. The agreement reportedly stipulated that Celsius would provide additional collateral if the price of Bitcoin dropped to avoid liquidation.
Celsius alleges that when Bitcoin’s price declined, Tether did not allow them to provide additional collateral as agreed. Instead, Celsius claims Tether liquidated the Bitcoin at a price that nearly matched the debt owed, approximately 815 million USDT.
The Stakes and Demands
The lawsuit seeks the return of the initial 39,542.42 BTC and two other Bitcoin transfers made during the same period, totaling 57,428.64 BTC. Additionally, Celsius is asking for no less than $100 million in damages, with the final amount to be determined at trial, plus legal fees.
Tether’s Rebuttal and Reassurances
Tether, however, strongly denies these allegations. In a statement, the company described the lawsuit as “baseless” and a “shakedown.” Tether contends that Celsius chose not to provide the extra collateral and instructed Tether to sell Bitcoin to close out its position.
“When Celsius chose not to post additional BTC, it directed Tether to liquidate the BTC collateral Tether held to close out its roughly 815 million USD₮ position with Tether,” the company stated.
Tether argues that the lawsuit “seeks to improperly impose the costs of Celsius’ mismanagement and failure on Tether.” The company has vowed to “vigorously defend” itself against “unwarranted allegations.”
To reassure USDT holders, Tether emphasized that the lawsuit would not impact them, citing its $12 billion in consolidated equity as of June 30, 2024, as a safeguard. The company also highlighted its “extremely profitable business with further profits accruing monthly.”
Implications for the Crypto Industry
This legal battle unfolds against the backdrop of Celsius Network’s bankruptcy, adding another layer of complexity to the already tumultuous cryptocurrency market. The outcome of this case could have significant implications for the broader crypto industry, particularly regarding collateralized lending practices and the responsibilities of stablecoin issuers.
As this high-stakes legal battle unfolds, it sends shockwaves through the cryptocurrency ecosystem, raising critical questions about the nature of collateralized lending in the digital asset space. With billions of dollars at stake and two industry giants locking horns, the outcome could redefine the rules of engagement for stablecoin issuers and crypto lenders alike. As the courtroom drama intensifies, all eyes in the crypto world will be fixed on this case, knowing that its resolution could reshape the future of decentralized finance. Will Celsius reclaim its lost Bitcoin fortune, or will Tether successfully defend its actions? The answer may not just determine the fate of these two companies but could set a precedent that echoes through the corridors of the crypto industry for years to come.
