Celsius sues Tether for $3.4 billion

Celsius demands more than 57,000 Bitcoin back from Tether. What's behind the spectacular crypto lawsuit against the USDT-publisher?

Hardly has the dust settled after the lenient verdict for Ripple in its four-year lawsuit with the SEC, or the crypto sector is threatened by the next legal riot. Insolvent lending platform Celsius has filed a lawsuit against Tether, accusing the stablecoin issuer of large-scale asset misappropriation.

The amount in dispute according to a court document: a total of 57,428.64 BTC worth nearly $3.4 billion currently. Recently, Celsius made headlines when the company made sued former customers who had withdrawn money in the 90 days before the bankruptcy. Now Tether is coming into the crosshairs of prosecutors.

Source: cases.stretto

The reason for the fuss: During Celsius' insolvency proceedings, Tether allegedly borrowed a large amount in USDT, for which Celsius in turn provided 39,542.42 BTC as collateral. However, due to the significantly falling BTC rate, the lending platform had to provide additional collateral in June 2022.

Tether is now accused of completely liquidating the Bitcoin in question, without even allowing the company to post additional collateral. At the time, the BTC price hovered around $20,000, a level that was temporarily breached in July of the same year. Accordingly, the current fiat value is about three times higher than at the time of the incident.

Tether speaks of "blackmail" and resists allegations

Tether absolutely will not accept such accusations. In a new blog post the company writes that Celsius' lawsuit is completely "baseless" and that it will "vigorously defend itself." "The BTC was liquidated at the instruction and consent of Celsius at June 2022 prices," the stablecoin issuer further states, speaking of approximately $815 million of borrowed USDT.

The amount in dispute is not entirely clear, as Tether itself refers in the post only to the 39,542 Bitcoin sold. But: according to page 28 of the complaint, Celsius apparently also wants two other transfers from the same period invalidated, which would result in a total amount of 57,428.64 BTC.

Recently, Tether reported record earnings in the second quarter of the current year: $1.3 billion the company behind the popular USDT stablecoin earned. In total, this already means more than $5.2 billion in profits for the first half of 2024, underscoring Tether's strength.

No wonder the reaction to the lawsuit there is relaxed: "Tether is an extremely profitable company that makes additional profits every month. Therefore, even in the unlikely scenario that this baseless lawsuit achieves something, Tether token holders will not be affected."

The collapse of Celsius was one of the most dramatic crypto events in the course of the volatile year 2022. The lending platform had to file for bankruptcy over the summer, with liabilities of $5.5 billion exceeding assets by more than $1.2 billion. Currently, Celsius' former CEO, Alex Mashinsky, is free on $40 million bail. His trial is scheduled for September.