- Celsius Network Ltd. has filed a noteworthy lawsuit against Tether, seeking over $2 billion in lost Bitcoin.
- The lawsuit points towards alleged “fraudulent” transfers and contractual breaches by Tether.
- This legal action unfolds amidst Celsius’ bankruptcy proceedings, highlighting the stakes involved.
Discover the legal battle between Celsius and Tether, where $2 billion in Bitcoin erodes amidst allegations of fraudulent transfers and contract breaches.
Celsius’ Assertive Legal Moves Against Tether
Celsius, the established crypto lending firm, recently initiated a lawsuit against Tether and its associated entities. The complaint, filed in federal bankruptcy court, accuses Tether of making “fraudulent” and “preferential” Bitcoin transfers valued at over $2 billion. Celsius aims to recover these assets, claiming the actions precipitated their slide into bankruptcy.
Scrutiny Over Tether’s Collateral Demands and Transfers
Back in 2020, Celsius entered a loan agreement with Tether Limited, borrowing stablecoins while offering substantial Bitcoin as collateral. According to the complaint, in the ninety days leading to Celsius’ bankruptcy on July 13, 2022, Tether demanded and received significant new collateral. These “Preferential Top-Up Transfers” and “Preferential Cross-Collateralization Transfers” allegedly harmed Celsius’ financial position while unfairly benefiting Tether.
Preferential Application Transfer & Contract Breach
On June 13, 2022, Tether issued a final demand for additional collateral with a ten-hour response time. Despite this, Tether swiftly liquidated Celsius’ 39,542.42 BTC without adhering to the agreed waiting period, a move termed the “Preferential Application Transfer.” This premature action significantly reduced the BTC’s market value, causing extensive financial harm to Celsius.
Celsius Seeks Judicial Redress
Celsius contends the rapid liquidation of their BTC was commercially imprudent. Market norms suggest that offloading a large BTC block over an extended period ensures minimal price impact. However, Tether’s hasty actions caused substantial losses for Celsius. The crypto lender argues that this preemptive sale prevented them from leveraging the automatic stay of bankruptcy, thereby accelerating their financial woes.
Conclusion
This lawsuit underscores the critical tensions within the cryptocurrency lending space, particularly concerning collateral management and contract enforcement. Celsius’ legal action against Tether seeks to reclaim lost Bitcoin and address the purported breaches. The outcome of this case could set significant precedents for future dealings and regulatory oversight in the crypto industry.
