In a dramatic turn of events in the cryptocurrency world, defunct crypto lender Celsius Network has filed a lawsuit against stablecoin issuer Tether, seeking a staggering $3.5 billion in Bitcoin returns, damages, and legal fees. The lawsuit, filed on August 10, alleges that Tether misappropriated assets during Celsius’ bankruptcy proceedings.
At the heart of the lawsuit is a complex series of transactions between the two companies. According to the legal filing, Tether had previously loaned Celsius a significant amount of USDT, Tether’s USD-pegged stablecoin. In exchange for this loan, Celsius claims it sent Tether 39,543.42 Bitcoin as collateral during its bankruptcy proceedings.
The crux of Celsius’ complaint is that Tether allegedly liquidated this Bitcoin collateral at a price that almost exactly covered the outstanding debt, without allowing Celsius the opportunity to provide additional collateral. This action, Celsius argues, was improper and resulted in substantial losses for the bankrupt crypto lender.
This lawsuit comes at a time when both companies are under intense scrutiny. Celsius Network filed for bankruptcy in July 2022 amid a broader crypto market downturn, leaving many of its customers unable to access their funds. Tether, on the other hand, has faced ongoing questions about the backing of its USDT stablecoin and its role in the broader cryptocurrency ecosystem.
The outcome of this legal battle could have far-reaching implications for the crypto industry. It raises important questions about the responsibilities of crypto companies in dealing with distressed assets, the nature of collateralized crypto loans, and the potential for conflicts of interest in the tightly interconnected world of cryptocurrency finance.
As the case progresses, it will likely draw significant attention from regulators, investors, and the broader crypto community. The lawsuit underscores the complex legal and financial challenges facing the cryptocurrency industry as it continues to evolve and mature.
Both Tether and Celsius have yet to provide detailed public comments on the lawsuit beyond the initial filing. The crypto community awaits further developments in this high-stakes legal battle between two once-prominent players in the digital asset space.
