On August 9, 2024, Celsius Network filed a lawsuit in the U.S. Bankruptcy Court for the Southern District of New York against Tether. The legal action centers around allegations of fraudulent and preferential Bitcoin transfers, which Celsius claims contributed to its financial collapse. Celsius is seeking the return of 57,428.64 Bitcoin, worth approximately $3.3 billion at current market prices.

Celsius alleges that Tether’s liquidation of these Bitcoin assets was conducted without proper justification. And during a critical period leading up to its bankruptcy. The lawsuit claims that Tether’s actions breached contractual agreements and that the liquidation prices were significantly lower than the market value at the time, resulting in substantial losses for Celsius.

Tether’s Defense Against the Allegations

Tether has strongly refuted Celsius’s claims, with CEO Paolo Ardoino dismissing the lawsuit as baseless. Via a tweet on X, Ardoino explained that Celsius provided the Bitcoin as collateral for loans issued in Tether’s stablecoin, USDT,

Moreover, according to the agreement’s terms, Celsius must provide additional collateral if Bitcoin’s value drops below a specified threshold. When Celsius failed to meet this obligation, Tether exercised its contractual right to liquidate Bitcoin to cover its position.

Ardoino further clarifies that Celsius had full knowledge and consent of the liquidation, and they carried it out at prices agreed upon during the transaction in June 2022. He criticized the lawsuit as an attempt by Celsius to recover losses through litigation, labeling it a “shakedown.” Tether asserts that Bitcoin was sold at an average price of $20,656.88 per BTC. Which was below the market closing price of $22,487.39 on June 13, 2022. Despite Celsius’s claims that this difference in price caused significant financial damage, Tether maintains that its actions were fully justified and in line with the agreed terms.

Broader Implications and Ongoing Legal Battles

The lawsuit is part of Celsius Network’s broader efforts to recover funds as it navigates bankruptcy proceedings. The company has been actively pursuing legal action against various entities within the cryptocurrency sector, aiming to reclaim assets and settle debts with its creditors.

However, despite the legal pressures, Tether remains in a strong financial position. The company reported a profit of $5.2 billion for the first half of 2024, driven largely by rising interest rates on U.S. government bonds. As of June 30, Tether’s consolidated equity stood at nearly $12 billion, reinforcing its financial stability. Tether has reassured holders of its USDT stablecoin that these legal challenges will not affect the coin’s stability or the company’s overall financial health.

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