Celsius

Bitcoin

when

Billion

<p>On August 9, 2024,&nbsp;<strong>Celsius Network Limited</strong>&nbsp;initiated a legal action against Tether Limited in the U. S. Bankruptcy Court for the Southern District of New York through its Blockchain Recovery Investment Consortium, LLC. The lawsuit aims to retrieve around $2.4 billion in&nbsp;<strong>Bitcoin (BTC)</strong>&nbsp;from Tether, accusing the company of liquidating Celsius’s collateral in the 2022 bear market.</p>
<h2 class="wp-block-heading" id="h-background-of-the-dispute"><strong>Background of the Dispute</strong></h2>
<p>The legal issue revolves around an agreement between Celsius and Tether that was signed in 2022; Celsius got a loan of USDT from&nbsp;<a href="https://tether.io/news/tether-will-defend-itself-against-shake-down-litigation-commenced-by-celsius/" rel="noopener noreferrer nofollow">Tether</a>&nbsp;and used BTC as collateral. The claim says that Tether demanded Celsius to provide more collaterals in June 2022 as the price of Bitcoin plummeted.</p>
<p>Celsius said that Tether acted wrongfully by cashing out more than 39,000 Bitcoins, roughly $816 million, before Celsius met the collateral requirements.</p>
<p>At the same time, Celsius accused Tether of fraudulent transfers and the violation of their contract terms. They claimed that the whole process of liquidation was hurried up and that the correct procedure as stipulated in their agreement was not adhered to.</p>
<p>The lawsuit seeks to reclaim the liquidated Bitcoin, which today is worth over $2B. It claims that Tether is seeking to enrich itself at the expense of Celsius.</p>
<h2 class="wp-block-heading" id="h-tether-ceo-response"><strong>Tether CEO Response</strong></h2>
<p>Tether Limited, through its CEO Paolo Ardoino, has said that the company has not done anything wrong and the lawsuit is just a “baseless shakedown.” The firm indicated that it had liquidated the collateral as provided for in the contract when Celsius did not produce more collateral.</p>
<p>Paolo further said that they sold the Bitcoin collateral as instructed by Celsius when the value of the asset fell and returned the excess to Celsius.</p>
<p>Ardoino also said that Tether’s actions were within the context of risk management it has set in place. Regarding the firm’s decision to liquidate, he said it was in line with the contract, and the firm had to protect its interest.</p>
<p>Tether has also stated it is certain it has not committed any legal wrongdoing and will fight the lawsuit. The CEO emphasized, “This lawsuit will be fought till the end. It’s important to set an example on behalf of the entire industry.”</p>
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter">
 <div class="wp-block-embed__wrapper">
  <blockquote class="twitter-tweet" data-width="550" data-dnt="true">
   <p lang="en" dir="ltr">In 2022, Tether made available USDt to some of its customers – including Celsius. Tether's arrangements with customers are very simple: Tether provides USDt to selected customers who provide an overcollateralization in Bitcoin.<br><br>If the price of bitcoin (the collateral) falls… <a href="https://t.co/UuEs1ig8zr" rel="noopener noreferrer nofollow">https://t.co/UuEs1ig8zr</a></p>— Paolo Ardoino <img src="https://s.w.org/images/core/emoji/15.0.3/72x72/1f916.png" alt="🤖" class="wp-smiley" style="height: 1em; max-height: 1em;"> <img src="https://s.w.org/images/core/emoji/15.0.3/72x72/1f350.png" alt="🍐" class="wp-smiley" style="height: 1em; max-height: 1em;"> (@paoloardoino) <a href="https://twitter.com/paoloardoino/status/1822272182027690341?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">August 10, 2024</a>
  </blockquote>
  <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 </div>
</figure>
<h2 class="wp-block-heading" id="h-celsius-s-allegations"><strong>Celsius’s Allegations</strong></h2>
<p>On the other hand, Celsius’s claim states that Tether wrongfully liquidated the Bitcoin before the said time. The complaint accuses the stablecoin firm of selling Celsius’s&nbsp;<a href="https://www.thecoinrepublic.com/2024/08/10/bitcoin-sees-spike-in-u-s-demand-could-btc-rally-to-new-ath/" rel="noopener noreferrer nofollow">Bitcoin</a>&nbsp;within less than ten hours from the time Celsius requested more collaterals. Celsius further explained that this was disadvantageous to other creditors and saw Celsius devalue a lot.</p>
<p>The complaint also takes issue with the collateral arrangements of Tether. It alleges that the timing and fashion of Tether’s liquidations were intentionally arranged to harm Celsius. The complaint is to seek the liquidation as a fraudulent transfer under the bankruptcy code.&nbsp; This would enable Celsius to get its Bitcoin back or an equivalent amount in Tether.</p>
<h2 class="wp-block-heading" id="h-legal-battle-and-industry-implications"><strong>Legal Battle and Industry Implications</strong></h2>
<p>The lawsuit has provided a basis for a legal conflict between two significant participants in the crypto market. Celsius was amongst the largest Crypto lenders but went bankrupt in 2022 during the crypto crash. Since then, the company has restructured and is now trying to recover what it claims are assets Tether stole.</p>
<p>Tether has been&nbsp;<a href="https://www.thecoinrepublic.com/2024/07/17/tether-faces-new-class-action-complaint-over-market-manipulation/" rel="noopener noreferrer nofollow">sued</a>&nbsp;many times in the past, but the company has always stood by its actions and financial health. Additionally, the firm’s CEO stated that USDT holders will not be impacted by the lawsuit. He highlighted that Tether has $11.5 billion in equity to cover any legal issues.</p>
<p>The outcome of this lawsuit could have far-reaching consequences, potentially influencing future agreements between crypto firms and lenders.</p>
<p>The post <a href="https://www.thecoinrepublic.com/2024/08/11/tether-vs-celsius-is-the-2-4-billion-lawsuit-against-them-justified/" rel="noopener noreferrer nofollow">Tether vs Celsius: Is the $2.4 Billion Lawsuit Against them Justified?</a> appeared first on <a href="https://www.thecoinrepublic.com" rel="noopener noreferrer nofollow">The Coin Republic</a>.</p>

Tether vs Celsius: Is the $2.4 Billion Lawsuit Against them Justified?

Table of Contents

Thecoinrepublic.com

Other articles published on Aug 11, 2024

New Shibarium Update Burns 70% of Transaction Fees

Nigerian President, Finance Minister and Attorney General Sued for Anti-Cryptocurrency Stances

Bitcoin Reaches $61,103 as Market Shows Signs of Recovery Despite Trading Volume Drop

ETF Bitcoin: $105 Million Evaporated, are Investors in Despair?

SUI’s Remarkable Comeback: Tops the Week’s Gainers at $0.90+

Federal Reserve Limits Crypto-Friendly Bank’s Operations

Join our free newsletter for daily crypto updates!