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Key Takeaways:
- A US judge ruled Celsius’s core lawsuit against Tether can proceed, focusing on breach of contract and fraudulent transfer allegations.
- Celsius alleges a fire sale of 39,500 BTC in 2022 cost the firm over $4 billion in value.
- Tether continues expanding its Bitcoin holdings while denying plans for an IPO despite a potential half-trillion-dollar valuation.
A US bankruptcy judge has ruled that Celsius Network’s multibillion-dollar lawsuit against Tether can move forward, rejecting key arguments by the stablecoin issuer to dismiss the case. The decision could have significant implications for Tether’s conduct during the 2022 crypto collapse and its relationship with collapsed lender Celsius.
Celsius Alleges Tether Conducted Improper BTC Fire Sale
The lawsuit, filed in New York, claims Tether “improperly” liquidated over 39,500 Bitcoin in June 2022, applying the proceeds to cover Celsius’s $812 million debt. Celsius alleges the Bitcoin was sold below market value—at an average price of $20,656—without adhering to a required 10-hour notice period.
Celsius contends that Tether’s actions constituted a breach of their lending agreement, violated good faith provisions under British Virgin Islands law, and involved fraudulent and preferential transfers avoidable under US bankruptcy code. The BTC liquidation, according to Celsius, cost the firm over $4 billion based on current prices.
Tether’s Jurisdictional Defense Rejected
Tether, incorporated in the British Virgin Islands and Hong Kong, had previously argued that the lawsuit was an extraterritorial application of US bankruptcy law. However, the court found sufficient ties to US jurisdiction, citing Tether’s use of US-based communications, personnel, and accounts.
The judge dismissed some of Celsius’s claims but upheld the most significant allegations—breach of contract, fraudulent transfer, and preference claims—allowing the case to proceed.
Celsius Creditors Still Seeking Compensation
Once one of the largest crypto lenders, Celsius filed for bankruptcy in July 2022 and exited Chapter 11 in January 2024. The company has since been working to repay its creditors. However, many creditors allege they are receiving up to 30% less than what was promised during the bankruptcy proceedings.
The Tether lawsuit could potentially unlock significant additional value for Celsius stakeholders if the court rules in the lender’s favor.
Also Read: Tether Mints $2 Billion USDT — Could It Trigger Bitcoin’s Next Breakout?
Meanwhile, Tether continues to expand its footprint in the crypto ecosystem. In June, CEO Paolo Ardoino dismissed speculation of a Tether IPO despite market talk that the company could be valued over $500 billion.
Tether has also deepened its involvement in Bitcoin mining and investment. It recently became the majority owner of Twenty One Capital and transferred nearly 37,230 BTC—worth approximately $3.9 billion—to addresses linked to the company.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
