- Celsius Network has filed a lawsuit against Tether in an attempt to recover more than $800 million lost funds in BTC, alleging wrongful liquidation.
- The case, which has been labeled as a “baseless shakedown” by Tether, was filed in the US Bankruptcy Court for the Southern District of New York.
- Amidst the escalating legal battle, Tether’s CEO, Paolo Ardoino, has firmly vowed to contest the claims, stating confidence in Tether’s contractual actions.
Celsius Network files a lawsuit against Tether over $800 million BTC liquidation, alleging contractual breaches and demands restitution.
Celsius Network’s Legal Pursuit Against Tether for BTC Liquidation
The long-standing crypto lender, Celsius Network, has initiated legal proceedings against the stablecoin issuer Tether, alleging a breach of contract and improper liquidation of Bitcoin worth over $800 million. Celsius’s lawsuit filed on August 9 in the US Bankruptcy Court for the Southern District of New York, claims that Tether did not uphold its contractual obligations established in the 2020 loan agreement. This agreement allowed Celsius to borrow USDT and EURT against Bitcoin collateral. Amid the 2022 market downturn, when the price of Bitcoin plummeted, Celsius alleges that Tether prematurely liquidated its Bitcoin collateral.
The Core Allegations of the Lawsuit
In the detailed filing, Celsius contends that Tether acted improperly by liquidating collateral before the stipulated ten-hour window, as per their Token Agreement. On June 13, 2022, Tether requested additional collateral, and despite Celsius’s attempts to comply, Tether proceeded with liquidating over 39,542 Bitcoin, thereby extinguishing Celsius’s residual interest in the collateral. Celsius has characterized these transactions as “Preferential Top-Up Transfers” and “Preferential Cross-Collateralization Transfers,” actions it claims unfairly advantaged Tether over other creditors.
Tether’s Stalwart Defense Against Allegations
Tether and its CEO, Paolo Ardoino, have issued strong rebuttals to the allegations, describing the lawsuit as meritless. Ardoino reiterated Tether’s practice of requiring overcollateralization in Bitcoin from borrowers, and asserted that the actions taken were within the legal and agreed-upon rights of the company. He retorted against Celsius’s version of events by stating that the lender had actually instructed Tether to liquidate the Bitcoin collateral following the significant price drop in mid-2022. Tether claims to have not only liquidated the collateral but also returned the excess funds to Celsius.
Implications and Reactions
While the legal battle unfolds, both firms are asserting confidence in their positions. Tether’s statement emphatically refers to the lawsuit as a strategic yet baseless maneuver by Celsius, emphasizing that the litigation will principally benefit attorneys and consultants profiting from the case. Despite the heated rhetoric, Ardoino reassured Tether’s stakeholders that the company’s financial discipline and robust equity, reportedly nearing $12 billion, safeguard it against any negative repercussions from the lawsuit.
Conclusion
As Celsius Network and Tether engage in this highly publicized legal tussle, the resolution will undoubtedly have significant implications for the two companies and possibly the broader crypto lending and stablecoin sectors. At the heart of this dispute lies the interpretation and execution of complex financial agreements under volatile market conditions. While Celsius aims to reclaim what it perceives as unjustly lost assets, Tether’s unwavering stance indicates a protracted legal confrontation. The industry watches closely, as the outcome may set a crucial precedent for future crypto-related financial disputes.
