- Celsius sues Tether for $2.4 billion over alleged Bitcoin fraud.
- Tether accused of unfairly demanding extra BTC collateral pre-bankruptcy.
- Celsius claims Tether’s BTC sell-off caused significant financial damage.
- Tether CEO dismisses the lawsuit as baseless and a money grab.
Celsius Sues Tether: A Legal Battle Over Alleged Bitcoin Fraud
Celsius Network, the now-bankrupt crypto lender, has filed a $2.4 billion lawsuit against Tether, one of the most prominent stablecoin issuers in the crypto world. The suit accuses Tether of engaging in fraudulent and preferential Bitcoin transactions that allegedly contributed to Celsius’ downfall in July 2022.
According to the lawsuit, Tether allegedly demanded and received extra Bitcoin collateral worth over $2 billion during the 90-day period leading up to Celsius’ bankruptcy filing. This period, known as the “preference period” under bankruptcy law, is when creditors are scrutinized for any unfair advantages they may have gained before a debtor’s financial collapse.
Celsius claims that Tether breached their agreement by selling off over 39,000 BTC at a significantly low price. This alleged action, according to Celsius, inflicted massive financial damage on the company, further accelerating its path to bankruptcy. The lawsuit portrays Tether’s actions as not only unfair but also as a key factor in Celsius’ financial troubles.
Tether’s Response: A “Baseless” Accusation
Tether, however, has strongly refuted Celsius’ claims. The CEO of Tether has labeled the lawsuit as “baseless” and described it as a desperate money grab by Celsius. Tether argues that it acted within its rights and under the terms of its agreement with Celsius.
The stablecoin issuer has emphasized that its actions were lawful and in response to the volatile market conditions at the time. Tether maintains that it was simply protecting its interests and minimizing risk in a rapidly deteriorating financial landscape.
This lawsuit raises significant questions about the dynamics between Celsius and Tether during one of the most turbulent periods in the crypto market. It also shines a light on the potential vulnerabilities and risks within the cryptocurrency lending and stablecoin sectors, especially during times of financial distress.
As this legal battle unfolds, it could have far-reaching implications for both Celsius and Tether, as well as for the broader crypto market. The outcome may set a precedent for how similar disputes are handled in the future, particularly in the context of bankruptcy and preferential transfers.
What’s Next for Celsius and Tether?
The legal proceedings are expected to be complex and drawn-out, given the significant amount of money involved and the technical nature of the allegations. Both companies are likely to face intense scrutiny as they present their cases in court.
For Celsius, this lawsuit represents a critical attempt to recover funds and potentially make creditors whole after its catastrophic collapse. However, Tether’s robust defense and financial resources could make this a challenging endeavor.
The broader crypto community will be watching closely, as the outcome of this case could influence how similar disputes are resolved in the future. The legal battle between Celsius and Tether underscores the high stakes and potential pitfalls of the rapidly evolving crypto landscape.
