Bankrupt crypto lender Celsius Network has launched a lawsuit against Tether, the issuer of the USDT stablecoin, in a contract dispute stemming from 2022. Celsius alleges that Tether improperly liquidated 39,542.42 Bitcoins, which were held as collateral for a loan provided in USDT, violating the terms of their agreement.
Dispute Origins and Legal Proceedings
The conflict traces back to a Bitcoin crash in early 2022, a significant factor leading to Celsius’s bankruptcy filing in July 2022. The lawsuit centers on a revised agreement made in January 2022, under which Celsius secured nearly $2 billion in USDT from Tether, using large quantities of Bitcoin, Ether, and Tether Gold as collateral.
According to the revised agreement, if the value of the collateral fell below a certain threshold, Tether was required to issue a notice and allow Celsius a ten-hour window to address the shortfall by posting additional collateral. However, as Bitcoin’s value plummeted in early 2022, the value of the collateral dropped sharply, prompting Tether to demand more collateral from Celsius.
Celsius complied, transferring an additional 15,658.21 Bitcoin and 2,228.01 Bitcoin for a separate loan. Despite this, on June 13, 2022, Tether allegedly issued another demand for more collateral but proceeded to liquidate the entire 39,542.42 Bitcoin without granting Celsius the ten-hour period to meet the demand, as stipulated in their agreement.
Celsius argues that Tether’s actions were improper, resulting in the loss of their residual interest in the collateral, which they claim was worth around $800 million at the time. With Bitcoin’s value increasing since then, the collateral is now worth more than $2 billion, prompting Celsius to seek a refund of the liquidated assets.
Tether’s Response
Tether has dismissed the lawsuit as baseless, characterizing it as a “shameless litigation money grab” by Celsius. The stablecoin company acknowledged Celsius’s claim of $2.4 billion in Bitcoin but firmly rejected the accusations, insisting that it acted within its rights under the loan agreement.
The lawsuit also seeks the return of the additional 15,658.21 Bitcoins and 2,228.01 Bitcoins transferred as top-up collateral, bringing the total claim to over $3.5 billion at current Bitcoin prices.
Tether’s Milestone
Amid this legal battle, Tether’s USDT stablecoin recently achieved a new milestone, reaching a market cap of $115 billion, further solidifying its position as a dominant force in the cryptocurrency market.
