A US bankruptcy judge has granted permission for Celsius Network, the bankrupt cryptocurrency lender, to pursue its lawsuit against Tether, the issuer of the market’s largest stablecoin, USDT.
Celsius Alleges ‘Fire Sale’ Of BTC
According to the filing, Celsius claims that it was in the process of preparing Bitcoin (BTC) to meet a collateral demand from Tether when Tether’s representatives insisted on immediate payment.
This demand led to what Celsius describes as a “fire sale” of its collateral, resulting in the sale of 39,542.42 BTC. The company had transferred this amount to Tether as collateral in the 90 days leading up to its bankruptcy, which included various “top-up transfers” and new loan collateral.
The details of the case reveal that Celsius is seeking the return of approximately 57,428.64 BTC, valued at around $4 billion, in addition to claiming $100 million in damages for breach of contract.
However, there is a notable discrepancy regarding the valuation of these Bitcoin transfers; while Celsius demands the return of the full amount, Tether’s own communications suggest that the value involved is only $2.4 billion.
Is Tether Preparing For Its Legal Defense?
In its legal arguments, Celsius has asserted that Tether’s actions reflect a broader “scheme to exploit the US cryptocurrency market,” which they believe could serve as a basis for jurisdiction in this case.
Moreover, Celsius contends that the transfers made to Tether were preferential and should be scrutinized under bankruptcy law. They argue that the stablecoin issuer received more than it would have in a Chapter 7 liquidation, thus establishing a preference claim.
Tether, for its part, dismissed the lawsuit back in August 2024 as a “shake down,” asserting that Celsius was responsible for providing additional collateral as Bitcoin prices fluctuated. Tether maintains that their demands were justified and that Celsius’s mismanagement should not impose undue costs on them.
On Wednesday, Tether CEO Paolo Ardoino shared a brief video clip on the social media platform X, formerly known as Twitter, depicting a gladiator in a combat arena.
This could indicate that the company will defend itself against Celsius’ claims, which could result in a prolonged legal dispute between the two parties. However, Tether’s official statement on the matter is still pending.
In addition to the market’s regulatory developments, Bitcoin experienced a significant increase, nearing its record high of $111,800 reached in mid-May of this year. As of this writing, the market’s leading cryptocurrency trades at $108,689, representing a 3% price increase in the 24-hour time frame.
However, BTC reached a three-week high of $109,800 earlier on Wednesday, but was unable to surpass its nearest resistance at the $110,000 mark.
Featured image from DALL-E, chart from TradingView.com
