- The company is accusing Tether of mishandling 57,428.64 BTC, worth $2.4 billion, that was posted as collateral during Celsius’ bankruptcy.
- Tether has denied the allegations, claiming that it followed the terms of its 2022 agreement with Celsius.
The ongoing clash between defunct cryptocurrency exchange Celsius and stablecoin issuer Tether has escalated into a $3.5 billion lawsuit. Celsius claims that Tether mishandled a significant amount of Bitcoin collateral during the company’s bankruptcy proceedings, leading to a substantial financial loss.
In the lawsuit filed on August 9, 2024, Celsius alleged that Tether mishandled approximately 57,428.64 BTC, worth $2.4 billion at the time, that had been posted as collateral. Celsius argued that Tether liquidated the Bitcoin without providing them the chance to add more collateral to avoid liquidation, as agreed upon. The lawsuit seeks the return of the BTC or its equivalent in U.S. dollars, along with damages and legal fees, bringing the total claim to $3.5 billion.
See Related: Celsius Resumes Withdrawals For A Selection Of Users, Months After Declaring Bankruptcy
Tether’s Response To The Allegations
Tether has vigorously denied the allegations, describing the lawsuit as a “baseless shakedown.” The company asserts that it followed the terms of the 2022 agreement, under which Celsius had borrowed USD₮, Tether’s stablecoin.
According to Tether, as Bitcoin prices fell in June 2022, Celsius was required to post additional collateral. When Celsius failed to do so, Tether claims it was directed to liquidate the Bitcoin collateral to close out the $815 million position.
“The complaint is undermined by the actual facts underlying the agreement between Celsius and Tether, relies on an obvious misapplication of the law, ignores the numerous defenses that Tether has to the claims asserted against it and raises substantial jurisdictional questions,” the company said.
Additionally, Tether argued that Celsius’ lawsuit is an attempt to shift the blame for its own mismanagement. “This lawsuit seeks to improperly impose the costs of Celsius’ failure on Tether,” the company stated in a blog post. Tether remains confident in its legal position, asserting that the facts and the law are on its side.
The company also highlighted its strong financial standing, noting that its consolidated equity reached nearly $12 billion as of June 30, 2024.
Tether has emphasized that, regardless of the outcome, its operations and token holders will remain unaffected. The company’s financial health, coupled with its profitability, provides a buffer against the potential impact of the lawsuit.
