Tether Limited, the issuer of the USDT stablecoin, has responded to a lawsuit filed by Celsius Network Limited, branding it as “baseless” and a “meritless shakedown.” The legal dispute, which was filed on August 9 in the U.S. Bankruptcy Court for the Southern District of New York, revolves around a contentious $2.4 billion Bitcoin liquidation that Celsius alleges was wrongful.
The conflict centers on a 2022 agreement between Tether and Celsius, where Celsius provided Bitcoin as collateral for a USDT loan from Tether. According to Celsius, Tether liquidated $2.4 billion worth of Bitcoin collateral in June 2022 under unjust circumstances. Celsius is seeking the return of this Bitcoin, arguing that the liquidation was improperly executed.
Tether counters that the liquidation was conducted with Celsius’s full consent and direction. The liquidation occurred amid a severe downturn in Bitcoin’s price in June 2022, leading to a margin call for Celsius. As Bitcoin’s value plummeted, Celsius was required to supply additional collateral to avoid the liquidation of its Bitcoin holdings. Tether claims that Celsius failed to provide this additional collateral and instructed Tether to liquidate the Bitcoin to settle a debt of $815 million in USDT.
In response to the lawsuit, Tether has labeled the legal action as a strategic maneuver by Celsius to shift the blame for its financial woes onto Tether. The company argues that the lawsuit misinterprets their agreement and disregards the facts. Tether asserts that the decision to liquidate the Bitcoin was made with Celsius’s full agreement and knowledge.
Tether’s press release described the lawsuit as an attempt to “unfairly impose the costs of Celsius’ mismanagement and failure on Tether.” The company is prepared to vigorously defend itself in court, emphasizing its confidence in prevailing against what it views as a frivolous legal challenge. Tether plans to present evidence showing that Celsius was fully aware of and agreed to the liquidation process.
The lawsuit between Tether and Celsius highlights significant issues within the cryptocurrency industry, particularly concerning financial agreements and collateral management. It underscores the complexities involved in such contracts and the potential legal challenges that arise during market volatility.
As the cryptocurrency industry faces increased regulatory scrutiny, this case could set a precedent for how similar disputes are handled in the future. It emphasizes the importance of clear and well-documented agreements in mitigating risks and avoiding legal conflicts. For Celsius, the lawsuit is part of its broader efforts to address claims from creditors and navigate its bankruptcy proceedings. For Tether, defending against the lawsuit is critical for maintaining its reputation as a reliable entity in the crypto market.
The unfolding legal battle between Tether and Celsius is a significant event in the cryptocurrency sector, with potential implications for how financial agreements and collateral are managed in volatile markets. As the case progresses, it will be closely monitored by industry participants and legal experts, potentially influencing future practices and regulatory approaches in the crypto space.
August 2024, Cryptoniteuae