03.07.2025 21:05
A US bankruptcy judge has allowed the bankrupt cryptocurrency lender Celsius to proceed with its substantial $4 billion lawsuit against Tether, the prominent stablecoin issuer. The ruling follows Celsius's allegations that Tether improperly liquidated 39,500 Bitcoin, serving as collateral for a loan, violating contractual agreements. This liquidation, Celsius claims, disregarded a mandated 10-hour waiting period, significantly impacting the value of the collateral at the time.
Despite this ongoing legal battle, Celsius has already made significant strides in compensating its creditors. Since January 2024, the company has distributed over $2.5 billion to more than 251,000 claimants, covering a remarkable 93% of all outstanding claims. This proactive approach to creditor repayment contrasts sharply with the ongoing legal dispute with Tether.
Judge Martin Glenn, presiding in the Southern District of New York, partially granted Tether's motion to dismiss certain aspects of the lawsuit. Specifically, claims relying on the legal standing of Tether's British Virgin Islands subsidiary and its alleged breach of "good faith and fair dealing" under the island's laws were dismissed. This strategic dismissal by the judge significantly narrows the scope of Celsius's case against Tether.
Tether, vehemently rejecting Celsius's initial claims in August 2023, had previously labeled the lawsuit as "baseless" and a "shakedown." The lawsuit stems from Tether's provision of USDt to Celsius in 2022, a transaction involving an overcollateralization in Bitcoin. This arrangement, typical of Tether's dealings, involved a risk based on Bitcoin’s price volatility, which ultimately formed the basis of Celsius's claims.
The collapse of Celsius in June 2022 during the crypto market downturn resulted in the loss of billions of dollars in investor funds. This dramatic failure heavily impacted numerous investors, leading to criminal charges and a 12-year prison sentence for Alex Mashinsky, Celsius's former CEO. Mashinsky is now barred from receiving any future benefits from Celsius's assets. The $4 billion lawsuit represents a critical chapter in the ongoing fallout from Celsius's bankruptcy, highlighting the complexities and risks inherent within the cryptocurrency lending market.
