- Embattled crypto exchange Celsius has commenced legal action against Tether, seeking $2.4 billion in claims.
- The lawsuit centers on allegations of improper liquidation of collateral by Tether.
- According to Celsius, Tether liquidated 39,542 bitcoin, significantly impacting the exchange’s financial standing.
The lawsuit underscores a significant dispute within the crypto space, emphasizing the challenges faced by financial entities in ensuring compliance and securing their assets.
Celsius Sues Tether Over $2.4 Billion in Collaterals
In a bid to recover considerable financial resources, Celsius has launched a lawsuit against Tether, highlighting serious allegations of improper handling of collaterals. The lawsuit targets 39,542 bitcoin, which is valued at over $2.4 billion based on current market rates. This legal move is part of Celsius’s broader efforts to restore its financial health post-bankruptcy.
The Core of the Allegations
The crux of Celsius’s allegations is that Tether liquidated the collaterals without adhering to the expected protocols. Specifically, in 2022, as the crypto markets began to plummet, Tether requested additional collateral from Celsius to support its loans. Celsius complied, providing additional funds, but shortly after, Tether liquidated 39,542 bitcoin. The lawsuit contends that this liquidation occurred within a few hours and for less than the reasonably equivalent value, especially considering Celsius’s insolvency at the time.
Tether’s Response to the Allegations
Tether’s CEO Paolo Ardoino has refuted Celsius’s claims, labeling the lawsuit as baseless. He noted that the firm operated within legal and business norms, suggesting that attempting to reclaim the liquidated bitcoin over two years later lacks merit. Ardoino’s statement aims to strengthen Tether’s position and defend its actions during the period in question.
Bankruptcy and Financial Repercussions
In July 2022, Celsius filed for bankruptcy after halting customer withdrawals the previous month. At its peak, the firm was valued at $3 billion. However, by the time bankruptcy was declared, Celsius estimated its assets and liabilities to be between $1 billion and $10 billion, impacting about 100,000 creditors. Despite holding over $167 million in cash reserves, the firm’s financial strategies and operations faced significant scrutiny, especially as market conditions deteriorated.
Celsius’s Ongoing Legal Battles
This lawsuit is part of a series of legal actions initiated by Celsius against other crypto firms. Recently, Celsius has filed lawsuits against Bancor DAO, Badger Dao, and Compound Labs, contending various flaws and deficiencies in their respective protocols and operations. The legal actions underscore Celsius’s aggressive approach to reclaiming assets and addressing grievances in the wake of its bankruptcy.
Conclusion
The ongoing legal battle between Celsius and Tether highlights the intricate and often contentious relationships within the cryptocurrency industry. As Celsius seeks to recover substantial assets, the outcomes of these legal proceedings could set significant precedents for how such disputes are resolved in the future. For stakeholders, the primary takeaway is the critical need for transparency, adherence to regulations, and robust financial practices to mitigate similar conflicts.
