Celsius Network Sues Tether to Recover Billions of Dollars in 'Preferential and Fraudulent Transfers'

The administrators of the bankrupt Celsius Network have sued to recover billions of dollars worth of “preferential and fraudulent transfers” of customer assets to Tether before Celsius’s lights went dark.

Bankrupt crypto lender Celsius Network has filed a lawsuit against stablecoin issuer Tether, seeking to recover billions of dollars in BTC that were liquidated by Tether after Celsius defaulted on its loans.

Celsius filed a civil suit in the U.S. Bankruptcy Court in the Southern District of New York on August 9, seeking to reclaim tens of thousands of BTC tokens that Celsius sent to Tether as collateral for loans of the latter’s USDT stablecoin. Tether ultimately liquidated the collateral as Celsius went bankrupt in July 2022.

Celsius is seeking the return of 57,428 BTC worth nearly $3.5 billion, as well as $100 million in damages, “additional damages to be determined at trial,” legal fees and other costs.

Celsius, as far as its customers were aware, was a digital asset lender, accepting tokens deposited by customers and then lending these tokens to third parties to generate revenue with which to pay interest on its customers’ deposits.

However, a bankruptcy court-appointed examiner concluded that Celsius was a Ponzi scheme from its inception. Celsius founder Alex Mashinsky used the sums raised from Celsius token sales to line his own pockets, so when the financial squeeze began with the mid-2022 onset of ‘crypto winter,’ Celsius had no assets with which to make good on its financial obligations.

Celsius struck a ‘token agreement’ with Tether in February 2020, allowing it to borrow USDT by posting BTC as collateral. The parties amended this agreement in January 2022 to change the strategy by which Celsius could be required to post additional collateral if the value of its original collateral fell below a specified threshold.

Celsius also secured a guarantee from Tether that if the value of its collateral exceeded its loan obligations at the time this collateral was liquidated, the excess would belong to Celsius, not Tether.

At the start of April 2022, Celsius owed Tether $512,330,000 in USDT, for which it had posted 16,505 BTC tokens. But as the value of BTC began to slide, Tether demanded collateral top-ups that ultimately totaled 16,737 BTC. Celsius also borrowed an additional $300 million in USDT, for which it posted another 10,700 BTC, of which 2,228 BTC was excess collateral.

By June 2022, Mashinsky was reaching out to Tether for “help squeezing [Celsius] short sellers,” but the suit claims Tether instead asked Celsius for additional collateral. Despite the amended agreement giving Celsius a 10-hour window in which to satisfy this demand, Tether embarked on “a fire sale of Celsius’s collateral,” fully liquidating the BTC Celsius had provided to Tether, including the top-up transfers.

This allowed Tether to “extinguish its entire exposure to Celsius, at a time when other creditors (e.g., customers) could not get access to any of their deposits held by Celsius.” Coming as they did within the 90-day window pre-bankruptcy, the transfers count as ‘preferential’ under the Bankruptcy Code and are allowed to be clawed back by administrators.

The bankruptcy administrators claim that if Celsius had been given the opportunity to put up the additional collateral demanded by Tether, no liquidation would have been necessary and Celsius “could have retained pledged [BTC] worth more than $2 billion today.”

Celsius further alleges that Tether applied the BTC against obligations owed to it for an average of $20,656 per token rather than the $22,487 going price at the time. Celsius alleges that this was a result of Tether selling the lot over a period of just a couple of hours, while “established market practices” would have allowed Tether to get the full price for each BTC sold.

No good grift goes unpunished

Tether’s official response called the “baseless” suit a “shake down” that “relies on an obvious misapplication of the law, ignores the numerous defenses that Tether has to the claims asserted against it and raises substantial jurisdictional questions.”

Tether expressed amazement that the bankruptcy administrators would make the allegations contained in the suit, given Tether’s view that the BTC that Celsius sent Tether as collateral was “liquidated at Celsius’ direction and with Celsius’ consent at June 2022 prices.”

Tether claimed the suit “proves the adage that ‘no good deed goes unpunished’” and insisted that the company “will never fall prey to shameless litigation money grabs. We will vigorously defend ourselves against the unwarranted allegations made against us, and we expect to prevail in this litigation.”

この訴訟には別の物議を醸す側面があります。それは、テザーがBTCと引き換えにUSDTをどのように発行したかを示しています。これは、次のように規定されている独自の利用規約への明白な違反です

The above is the detailed content of Celsius Network Sues Tether to Recover Billions of Dollars in 'Preferential and Fraudulent Transfers'. For more information, please follow other related articles on the PHP Chinese website!