Celsius, a crypto lender that recently emerged from bankruptcy, has taken legal action against stablecoin issuer Tether. The lawsuit, filed in the US Bankruptcy Court for the Southern District of New York, accuses Tether of improperly liquidating over $800 million worth of BTC collateral during a market downturn in mid-2022. According to Celsius, Tether breached their contract by requesting additional collateral and quickly liquidating Celsius’ entire Bitcoin collateral without waiting for the agreed-upon deadline.
In response to the lawsuit, Tether and its CEO Paolo Ardoino have vehemently denied the allegations. Ardoino explained that Tether provides USDT to customers who overcollateralize with Bitcoin and that they have the right to liquidate collateral if the price falls below a certain threshold. Tether claims that Celsius instructed them to sell the Bitcoin collateral during the market downturn, and they returned any excess proceeds to Celsius as per the agreement.
While Tether maintains that they acted within the terms of their agreement with Celsius, the lender disputes this claim. Celsius alleges that Tether’s liquidation of the Bitcoin collateral was unfair and greatly benefitted Tether at the expense of Celsius. The lawsuit contends that Tether’s actions were not in line with the agreed-upon contractual terms and accuses Tether of engaging in preferential transfers that favored the stablecoin issuer over other creditors.
The Dueling Statements
Following the filing of the lawsuit, both Celsius and Tether issued conflicting statements regarding the events that led to the legal dispute. Tether characterized the lawsuit as a “baseless shakedown” that would only benefit legal professionals involved in the case. In contrast, Celsius asserted that Tether’s actions were unjust and aimed at unfairly enriching the stablecoin issuer.
The Ripple Effects
As the legal battle between Celsius and Tether unfolds, stakeholders in the cryptocurrency community are closely monitoring the developments. The outcome of this lawsuit could have implications for how crypto lenders and stablecoin issuers interact in the future. Both parties are standing firm on their positions, and the resolution of this dispute could set a precedent for similar cases in the volatile world of cryptocurrency finance.
The legal battle between Celsius and Tether underscores the complexities of contractual agreements in the cryptocurrency space. As both parties dig in their heels and assert their claims, it remains to be seen how the courts will adjudicate this high-stakes dispute. Amidst the acrimony and accusations, one thing is clear – the outcome of this lawsuit could have far-reaching implications for the evolving landscape of digital asset finance.
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