Tether’s Battle with Celsius: A Legal Clash Over $3.3 Billion

In a dramatic courtroom showdown, Tether (USDT-USD) is gearing up to fend off a hefty lawsuit from Celsius Network. The crypto giant Celsius, now a shadow of its former self after a bankruptcy, has thrown down the gauntlet, demanding Tether fork over 57,428.64 Bitcoin (BTC-USD)—worth about $3.3 billion at current prices. The lawsuit, filed in the U.S. Bankruptcy Court for the Southern District of New York, alleges that Tether fraudulently protected itself during the market crash of mid-2022, leaving Celsius high and dry.

Celsius’ Claim

Celsius, which once boasted a robust presence in the crypto world, claims that Tether’s actions in 2022 were less than above board. The company’s complaint states that Tether liquidated Celsius’s Bitcoin collateral at prices below the market rate. Celsius argues that this was a strategic maneuver by Tether to insulate itself from the fallout of the crypto crash. They’re seeking not only the return of $2.4 billion worth of Bitcoin but also an additional $100 million in damages for alleged breaches of contract.

Tether’s Strong Response

Tether isn’t taking this lying down. The company has labeled the lawsuit as a “shakedown,” insisting that Celsius directed the liquidation of its assets and that Tether acted within the bounds of their agreement. Tether’s CEO, Paolo Ardoino, took to X (formerly Twitter) to voice his frustration, stating, “This lawsuit will be fought till the end. It’s important to set an example on behalf of the entire industry that shameless money grabs will not work.”

According to Tether, the agreement required Celsius to post additional collateral as Bitcoin prices fell. When Celsius failed to do so, Tether liquidated the collateral to cover the loan. Tether, which reported a robust $12 billion in equity as of June 30, 2024, asserts that its token holders will remain unaffected, regardless of the lawsuit’s outcome.

Key Takeaway

With Celsius seeking billions and Tether standing firm, the outcome of this case could impact how crypto firms handle financial agreements and disputes. For now, Tether’s defense is firm, and Celsius’s dramatic claims are far from over.