A United States bankruptcy judge has ruled that Celsius Network’s $4 billion lawsuit against Tether can proceed. The judge determined Celsius’s claims are sufficiently connected to US activities, allowing breach of contract and fraudulent transfer claims.
According to a court filing in New York, Celsius Network claims Tether orchestrated a “fire sale” of over 39,500 Bitcoin in June 2022 to cover an $812 million debt, allegedly disregarding contractual procedures.
Celsius to File $4B Tether Lawsuit
The crypto lender’s lawsuit against Tether centers on a margin call triggered by a drop in Bitcoin’s price. Celsius claims Tether prematurely sold its collateral, violating a 10-hour waiting period, and liquidated 39,500 BTC at $20,656, below market value, before transferring the assets to Bitfinex accounts. The crypto lender claims Tether’s liquidation of its bitcoin collateral resulted in a loss of over $4 billion at current prices.
The lawsuit comes after Celsius Network emerges from Chapter 11 bankruptcy on January 31, 2024, marking the start of creditor repayments.
The crypto lending and Bitcoin mining firm asserts that Tether’s actions breached the lending agreement, violated the principles of good faith and fair dealing, and constituted fraudulent and preferential transfers under the US Bankruptcy Code, potentially allowing Celsius to recover its losses.
The crypto lender argues that Tether’s actions had sufficient US ties, including US-based communications, personnel, and financial accounts, to establish jurisdiction in US courts, despite Tether being incorporated in the British Virgin Islands and Hong Kong.
In August 2024, Tether attempted to dismiss the lawsuit, citing a lack of US jurisdiction and insufficient claims. The court partially granted the motion, dismissing some counts, but allowed key claims, including breach of contract, fraudulent transfer, and preference claims, to move forward.
Tether’s Ambitious Expansion
Tether has diversified its investments, acquiring a majority stake in Bitcoin mining firm Bitdeer and exploring artificial intelligence and Bitcoin treasury strategies. It’s also developing stablecoins pegged to currencies other than the US dollar.
The blockchain firm made history by investing in an Italian football club, becoming the first European team to have a crypto firm as a major shareholder.
These efforts have helped Tether maintain its position as the leading stablecoin issuer, expanding its presence in the crypto market and solidifying its growth strategy amid the ongoing lawsuit with Celsius Network.
