Tether Faces Legal Battle Against Celsius Over $3.3 Billion Loan Dispute
Tether, the issuer of the stablecoin USDT, is facing a legal battle against cryptocurrency lending firm Celsius.
Celsius has filed a lawsuit seeking to recover over 57,000 BTC, equivalent to approximately $3.3 billion at current prices. The dispute stems from a loan agreement between the two entities, with Tether strongly denying the accusations and calling the lawsuit an ‘attempted extortion’.
Accusations from Celsius
According to documents filed by Celsius in the Southern District of New York bankruptcy court, the company accuses Tether of making fraudulent BTC transfers to protect itself from Celsius’ impending bankruptcy in 2022.
Celsius claims that Tether demanded and obtained additional collateral to secure its position while markets were in freefall. The company believes these actions favored Tether at the expense of other creditors, constituting a violation of bankruptcy rules.
Tether’s Response to Celsius’ Accusations
Tether immediately responded to the accusations by rejecting Celsius’ claim. The company states that the BTC in question were liquidated with Celsius’ consent and in accordance with a clear contract between the two parties.
Paolo Ardoino, CEO of Tether, stated on the X platform (formerly Twitter) that the lawsuit is ‘baseless’ and stands no chance of success. Tether is prepared to defend its position to the end to establish a precedent against what it considers a financial ‘low blow’.
Details of the Contested Contract
The core of the dispute lies in a loan agreement that allowed Celsius to borrow stablecoins to finance its operations. In exchange, Celsius was required to deposit BTC as collateral. When the market began to collapse in mid-2022, Celsius allegedly chose not to provide additional collateral, leading Tether to liquidate the BTC it held as collateral. Celsius disputes this liquidation, claiming that the price applied in the sale was below market value, causing harm to its assets.
Potential Consequences
Tether sought to reassure USDT token holders by emphasizing that even in the highly unlikely event that Celsius prevails, Tether’s financial position would remain strong. According to the company’s statements, the consolidated value of the Tether group reached nearly $12 billion as of June 30, ensuring the stability of USDT even in the event of a legal setback.
