Anika Begay
Defunct cryptocurrency lender Celsius has filed a lawsuit against Tether, accusing the stablecoin issuer of misappropriating assets. The move comes amid recent attempts by the cryptocurrency firm, which filed for bankruptcy in 2022, to recover billions of dollars in funds for creditors.
Why Celsius is demanding over $3.5 billion from Tether
The bankrupt Celsius has filed a series of lawsuits against various cryptocurrency companies in recent weeks, with the world’s largest stablecoin company, Tether, being the latest name on the list. Other companies currently embroiled in various legal battles with the now-defunct cryptocurrency lender include Badger DAO, Bancor, and Compound.
On Friday, August 9, Celsius filed its largest lawsuit yet against Tether, seeking billions of dollars in Bitcoin refunds, damages, and legal fees. According to the latest court filing, the company wants a refund of 39,542 BTC it used as collateral for loans it received from Tether.
As Bitcoin’s price began to decline in early 2022, Tether reportedly required more collateral from Celsius to cover the loans. The latest court filing also revealed that the cryptocurrency lender had taken out an additional $300 million in USDT loans from Tether months before, and within 90 days of, filing for bankruptcy in July.
Celsius said it fulfilled the request for additional collateral, sending more BTC as collateral on several occasions between May and June 2022. Following this payment, Tether made a second collateral request, but decided to liquidate Celsius’ collateral before the mandatory ten-hour waiting period.
In its lawsuit, Celsius argues that Tether liquidated collateral at a price that unfairly favored the stablecoin issuer without allowing the lender to provide additional collateral. The court filing reads:
Had Celsius been given the opportunity to satisfy the collateral claim, which he was contractually entitled to do, he might have avoided the sale of his Bitcoin near the bottom of the cryptocurrency market. Instead, that sale benefited only one creditor: Tether.
According to the filing, Celsius is asking the court to order Tether to forfeit the 15,658.21 Bitcoin, 2,228.01 Bitcoin, and 39,542.42 Bitcoin that were preferentially transferred from the cryptocurrency lender to the stablecoin issuer. These transfers total 57,428.64 BTC, which, at Bitcoin’s current price of $61,110, is worth approximately $3.5 billion.
Tether Label Lawsuit Is a ‘Brawl’
In a new blog post, Tether has vehemently denied any wrongdoing against Celsius, calling its recent lawsuit “baseless.” According to the stablecoin firm, Celsius fails to recognize the clear validity of the agreement it made years before its bankruptcy.
Tether stated in the blog post:
We look forward to answering in court for this baseless and forced extortion which will benefit no one but the lawyers, bankers and consultants involved in the case.
Tether CEO Paolo Ardoino reiterated the company’s position in a post on Platform X, declaring his willingness to set an example of blatant embezzlement in court.
In 2022, Tether made USDt available to some of its customers, including Celsius. Tether’s agreements with customers are very simple: Tether provides USDt to select customers who provide overcollateralization in Bitcoin.
If the price of bitcoin (the collateral) goes down… https://t.co/UuEs1ig8zr
— Paolo Ardoino 🤖🍐 (@paoloardoino) August 10, 2024
Finally, Ardoino wasted no time in mentioning Tether’s consolidated net worth of $12 billion and reassured USDT holders that in the “most unlikely scenario” that the lawsuit escalates, they would not be affected.
The price of Bitcoin on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from PYMNTS, chart from TradingView
