Defunct cryptocurrency lender Celsius has filed a lawsuit against Tether, accusing the stablecoin issuer of asset misappropriation. The move comes amid recent attempts by the cryptocurrency firm, which filed for bankruptcy in 2022, to recover billions of dollars in funds for creditors.
Why is Celsius asking for over $3.5 billion from Tether?
Bankrupt Celsius has filed a series of lawsuits against several cryptocurrency companies in recent weeks, and the The world’s largest stablecoin company Tether is the latest name on the list. Other companies currently embroiled in various legal battles with the now-defunct cryptocurrency lender include Badger DAO, Bancor, and Compound.
On Friday, August 9, Celsius filed its largest lawsuit against Tether, seeking billions of dollars in Bitcoin returns, damages, and legal fees. According to the latest presentation before the courtThe company wants a refund of 39,542 BTC it used as collateral for loans it took from Tether.
When the price of Bitcoin started to decline In early 2022, Tether reportedly requested more collateral from Celsius to cover the loans. The latest court document also revealed that the crypto lender had obtained an additional $300 million in USDT loans from Tether a few months before (and within 90 days after) the bankruptcy filing in July.
Celsius claimed to have complied with the request for additional collateral, sending more BTC as collateral on several occasions between May and June 2022. Following this payment, Tether made a second collateral demand, but decided to liquidate Celsius’ collateral before the mandatory ten-hour waiting period.
In its lawsuit, Celsius claims that Tether liquidated the collateral at a price that unfairly benefited the stablecoin issuer without allowing the lender to provide the additional collateral. The court filing said:
Had Celsius been given the opportunity to satisfy the collateral claim (which it was contractually entitled to do), it could have avoided the disposal of its bitcoins near the bottom of the cryptocurrency market. Instead, that disposal was carried out for the benefit of a single creditor: Tether.
According to the file, Celsius The petition requests the court to order Tether to forfeit the 15,658.21 bitcoins, 2,228.01 bitcoins, and 39,542.42 bitcoins preferentially transferred by the cryptocurrency lender to the stablecoin issuer. These transfers total 57,428.64 BTC, which, at the current bitcoin price of $61,110, is equivalent to approximately $3.5 billion.
The lawsuit against Tether is “extortion”
In a new Blog entryTether has vehemently denied any wrongdoing against Celsius and called its recent lawsuit “baseless.” According to the stablecoin firm, Celsius does not recognize the clear validity of the agreement reached years before its bankruptcy.
Tether said in the blog post:
We look forward to responding in court to this artificial and baseless extortion that will benefit no one but the lawyers, bankers and consultants involved in bringing this case.
Tether CEO Paolo Ardoino reiterated the company’s stance in a post on the X platform, expressing his willingness to make an example of blatant money-grabbing in court.
In 2022, Tether made USDt available to some of its customers, including Celsius. Tether’s arrangements with customers are very simple: Tether provides USDt to selected customers who offer overcollateralization in Bitcoin.
If the price of Bitcoin (the collateral) falls… https://t.co/UuEs1ig8zr
—Paolo Ardoino 🤖🍐 (@paoloardoino) August 10, 2024
Finally, Ardoino wasted no time in mentioning Tether’s $12 billion consolidated capital and reassuring USDT holders that in the “most remote scenario” where demand escalates, they will not be affected.
The price of Bitcoin on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from PYMNTS, chart from TradingView
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