Defunct cryptocurrency exchange Celsius has initiated legal action against Tether, accusing the stablecoin issuer of misappropriating assets and seeking nearly $3.5 billion in Bitcoin (BTC) returns, damages, and legal fees. This lawsuit centers around Bitcoin collateral that Celsius provided to Tether during its bankruptcy proceedings.
Celsius Alleges Improper Liquidation of Bitcoin Collateral
According to the lawsuit, Celsius claims that it transferred 39,542.42 BTC to Tether as collateral in exchange for a loan of Tether’s stablecoin, USDT. As Bitcoin’s price declined, Celsius was required to provide additional collateral to prevent liquidation. However, Celsius alleges that Tether liquidated the Bitcoin collateral at a price that nearly covered the debt without giving Celsius the chance to add more collateral.
Celsius is seeking the return of 57,428.64 BTC, which includes the original 39,542.42 BTC and two additional transfers made during the same period, or their current market value, totaling approximately $3.48 billion. The lawsuit also demands at least $100 million in damages, plus additional amounts to be determined at trial, along with legal fees.
Tether Denies Allegations, Vows to Defend Itself
Tether has strongly denied the allegations, labeling the lawsuit as baseless and a “shake down.” The company asserts that Celsius, not Tether, requested the liquidation of the Bitcoin collateral after choosing not to provide additional BTC to maintain its position. Tether claims that it acted according to the agreement between the parties and closed out Celsius’ $815 million USDT position accordingly.
In a recent blog post, Tether reassured its stakeholders, emphasizing its financial stability with $12 billion in consolidated equity. The company stated that even in the unlikely event that the lawsuit proceeds, Tether token holders would not be affected.
The outcome of this high-stakes lawsuit could have significant implications for both Celsius and Tether. As the legal battle unfolds, the crypto community will be closely watching how the court interprets the contractual obligations and whether Celsius can recover the billions it seeks.
