A U.S. bankruptcy judge has ruled that Celsius Network can move forward with its $4 billion lawsuit against Tether, rejecting key parts of Tether’s (USDC-USD) bid to dismiss the case. The suit accuses Tether of improperly liquidating nearly 40,000 Bitcoin during Celsius’s collapse in 2022, and the court’s decision clears the way for breach of contract and fraudulent transfer claims to proceed.
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Celsius Alleges Fire Sale Breach Cost Billions
At the heart of the complaint is a margin call and liquidation that Celsius says violated agreed procedures. According to Celsius, Tether dumped its Bitcoin collateral too quickly, within hours instead of observing a 10-hour waiting period, and sold it below market rates, averaging just $20,656 per BTC. Those proceeds, Celsius argues, were applied to its $812 million debt without good faith and fair dealing. The company claims the sale cost it over $4 billion at current valuations.
Jurisdiction Battle Favors Celsius
Tether, incorporated in the British Virgin Islands and Hong Kong, had argued the case was outside U.S. jurisdiction. But the judge sided with Celsius, citing the use of U.S.-based personnel, systems, and accounts in the disputed transactions. That opened the door for Celsius to pursue domestic claims under the U.S. Bankruptcy Code.
Court Dismisses Some Claims but Preserves the Core
While the judge did strike down a few lesser claims in the filing, the central charges—breach of contract, fraudulent transfer, and preference claims—remain intact. This keeps the most financially consequential elements of the lawsuit alive, potentially setting the stage for a blockbuster courtroom showdown between one-time crypto allies.
Tether Faces Heightened Legal and Regulatory Scrutiny
The ruling comes as Tether continues to attract attention for its growing Bitcoin exposure and outsized role in crypto markets. The company recently transferred over 37,000 BTC worth nearly $4 billion to related addresses and became the majority owner of Twenty One Capital, now the third-largest corporate Bitcoin holder globally. That spotlight is only intensifying.
With stablecoins and digital assets at the center of this legal battle, crypto investors will want to keep a close eye on how the lawsuit evolves and how broader market sentiment responds. You can track real-time crypto prices and analytics in the TipRanks Cryptocurrency Center. Click on the image below to find out more.
