Celsius Network Limited Takes on Tether in Court, Demands $2 Billion Worth of Bitcoin

The lawsuit was filed yesterday through the Blockchain Recovery Investment Consortium

Celsius Network Limited has filed a lawsuit against Tether Limited in the United States Bankruptcy Court for the Southern District of New York, demanding more than $2 billion in Bitcoin (BTC).

The lawsuit, filed on February 27, also names several of Tether’s affiliates as defendants, including Tether Holdings Limited, Bitfinex, DigFinex, and Defiance Digital Currency Group.

The legal battle stems from a deal struck between Celsius and Tether in 2022, where Celsius borrowed USDT from Tether and used BTC as collateral. However, as Bitcoin prices plummeted earlier this year, Celsius was required to add more BTC to the deal.

According to the lawsuit, Celsius instructed Tether to sell the BTC collateral to cover an outstanding $815 million USDT position, an action that Celsius now claims was carried out without proper authorization.

The lawsuit alleges that Tether, as a "closely affiliated entity," was fully aware of Celsius’ financial distress and breached its duty of good faith by carrying out the sale without obtaining Celsius’ consent.

Celsius is now seeking to recover around 56,633 BTC from Tether, which was the remaining balance in the BTC collateral account at the time of the sale, along with damages, interest, and other legal costs.

In response to the lawsuit, a Tether spokesperson described it as a "shameless money grab," claiming that Celsius is attempting to shift the blame for its own actions onto Tether.

According to Tether, the lawsuit "completely ignores the reality of the agreement that both parties signed and is built on a misapplication of the law."

The company's management has stated that they will vigorously defend themselves against the allegations and are confident in prevailing in the legal battle.

"As we've said many times, Tether will never fall prey to shameless litigation money grabs," the company said in a statement. "We will vigorously defend ourselves against the unwarranted allegations made against us, and we expect to prevail in this litigation."

Meanwhile, Tether has reported consolidated equity of nearly $12 billion as of June 30, 2023. The company also boasts strong reserves backing tokens in circulation, which amounted to over $118 billion.

With liabilities of just over $113 billion, Tether had a cushion of more than $5 billion in equity.

According to Paolo Ardoino, Tether's CEO, the company is not only financially stable but also highly profitable. In the first half of 2024, Tether saw record profits of $5.2 billion.

"With Tether Group's own equity reaching $11.9 billion, Tether has achieved an impressive and unmatched financial strength enabling it to continue leading the stablecoin industry in stability and liquidity," said Ardoino.

Tether's management also noted that their diversified investments in sustainable energy, Bitcoin mining, AI infrastructure, and more are not included in the reserves backing the issued tokens.

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