Tether has fired back against a lawsuit from defunct crypto lender Celsius Network over disputed Bitcoin, vowing to defend itself vigorously against what it deemed a “shakedown” and “baseless” litigation.
Celsius seeks to claw back 57,428.64 BTC, or its current market dollar equivalent, that the bankrupt crypto lender claims was improperly liquidated by the leading stablecoin issuer Tether before its bankruptcy filing over two years ago.
Tether has, however, assured that USDT token holders will not be impacted in any way by the lawsuit.
Celsius Network’s Allegations Against Tether
Filed on August 9 in the U.S. Bankruptcy Court for the Southern District of New York, Celsius claims that Tether loaned it a certain amount of Tether USDT (the company’s USD-pegged stablecoin). Celsius sent Tether 39,542.42 BTC in collateral in return for this loan.
As the market crashed in mid-2022, Celsius was required to provide additional collateral to avoid liquidation, per the two parties’ loan agreement. According to the legal filing, Celsius claims Tether insulated itself from the looming bankruptcy by making “preferential and fraudulent transfers” of BTC.
“Specifically, on several occasions, Tether demanded, and received, a significant amount of new, incremental collateral to improve its position in the impending bankruptcy,” according to the lawsuit.
The crypto lender, which declared bankruptcy in July 2022, claims that “Tether went ahead with an improper application of 39,542.42 Bitcoin,” ruining Celsius’s residual interest in the collateral. Celsius’ claim of $2.4 billion stems from Bitcoin’s present price.
Tether Hits Back
“No good deed goes unpunished,” Tether said on Aug. 9 in a response to the lawsuit. “We look forward to responding in court to this contrived, meritless shakedown that will benefit nobody other than the lawyers, bankers, and consultants involved in bringing this case.”
Tether notes that, rather than liquidating Celsius’ position in violation of their agreement, it was Celsius that requested the selloff after deciding not to provide further collateral:
“When Celsius chose not to post additional BTC it directed Tether to liquidate the BTC collateral Tether held in order to close out its roughly 815 million USD₮ position with Tether.”
“This lawsuit seeks to improperly impose the costs of Celsius’ mismanagement on Tether,” the stablecoin giant postulated, maintaining that the liquidation was done “at Celsius’ direction and with Celsius’ consent.”
While Tether has made clear its commitment to a potential legal showdown, it’s also been quick to reassure USDT investors. Highlighting its $12 billion in consolidated equity, the company said that “even in the most remote scenario in which this baseless lawsuit will get somewhere, Tether token holders will not be impacted.”
