Defunct Cryptocurrency exchange Celsius has taken legal action against Tether, accusing the stablecoin issuer of misappropriation of assets. Celsius is seeking the return of approximately $3.5 billion in Bitcoin (BTC), along with damages and legal fees, as part of its lawsuit. The case revolves around the liquidation of BTC collateral during Celsius’ bankruptcy proceedings.
Celsius’ Allegations Against Tether
The lawsuit alleges that Tether loaned a specific amount of its stablecoin, USDT, to Celsius during the latter’s bankruptcy process. In exchange, Celsius provided Tether with 39,542.42 BTC as collateral. According to Celsius, the agreement between the two parties required it to provide additional collateral if the price of Bitcoin dropped, in order to avoid liquidation of its assets, according to Cointelegraph.
However, Celsius claims that Tether liquidated the BTC collateral at a price point that nearly matched the debt without allowing Celsius the opportunity to provide further collateral. This liquidation is at the center of Celsius’ allegations, as it believes the process was not conducted in accordance with their agreement.
Tether’s Response to the Lawsuit
Tether has strongly refuted the allegations, describing the lawsuit as a “shakedown” and stating that the claims are “unwarranted.” In a recent blog post, the company emphasized its intention to “vigorously defend” itself against the lawsuit.
Tether’s position is that it was Celsius who requested the liquidation of the BTC collateral after deciding not to provide the additional collateral required to maintain the loan. The company stated,
“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.”
Tether also sought to reassure USDT stakeholders, highlighting its strong financial position. The company mentioned its $12 billion in consolidated equity and stated that
“even in the most remote scenario in which this baseless lawsuit will get somewhere, Tether token holders will not be impacted.”
Discrepancies in the Amounts Sought
The exact amount Celsius is seeking from Tether appears to be in question. Tether’s blog post and other reports within the crypto community cite 39,542.42 BTC, valued at approximately $2.4 billion as of August 10. However, the legal filing suggests that Celsius is seeking a larger amount.
According to the lawsuit, Celsius is requesting the court to void two additional transfers made during the same period. The plaintiffs have asked the court to “require Defendants to relinquish to Plaintiffs the 15,658.21 Bitcoin, 2,228.01 Bitcoin, and 39,542.42 Bitcoin preferentially transferred by Plaintiffs to Defendants” or their current dollar value.
Together, these three transfers total 57,428.64 BTC. With Bitcoin priced at $60,627 per BTC as of August 10, this amounts to approximately $3.48 billion that Celsius is seeking in its lawsuit. In addition to the Bitcoin in question, Celsius is also pursuing no less than $100 million in damages “plus additional damages to be determined at trial” and legal fees.
Legal Battle Looms Over Bitcoin
The lawsuit between Celsius and Tether underscores the complexities and risks involved in the cryptocurrency market, particularly when it comes to high-value transactions involving Bitcoin. As the case progresses, it could have significant implications for both companies, as well as for the broader crypto industry.
Celsius’ attempt to recover billions in Bitcoin from Tether highlights the ongoing legal challenges that can arise in the rapidly evolving world of digital assets. The outcome of this case could set a precedent for how similar disputes are handled in the future, especially in cases where the value of Bitcoin and other cryptocurrencies fluctuates significantly.
As the legal battle unfolds, it will be closely watched by stakeholders across the cryptocurrency ecosystem, given the potential impact on Bitcoin’s market dynamics and the legal framework surrounding digital asset transactions.