Celsius Sues Tether for $3.5B Over Bitcoin Collateral

Celsius, the bankrupt cryptocurrency exchange, has initiated legal action against Tether, accusing the stablecoin issuer of misappropriating assets and seeking restitution totaling approximately $3.5 billion. The lawsuit centers on Bitcoin collateral provided by Celsius to Tether, which was liquidated amid falling cryptocurrency prices.

Allegations and Legal Claims

The core of the dispute involves a specific transaction where Tether loaned USDT, its stablecoin backed by the US dollar, to Celsius. In return, Celsius posted 39,542.42 BTC as collateral. As Bitcoin’s value declined, Celsius was contractually obligated to provide additional collateral to avoid liquidation. However, Celsius alleges that Tether prematurely liquidated the Bitcoin collateral without allowing the exchange to post further assets, effectively wiping out its position.

Celsius is demanding the return of 57,428.64 BTC, including the 39,542.42 BTC collateral and additional Bitcoin transfers during the same period, or their equivalent value in U.S. dollars. The exchange is also seeking no less than $100 million in damages, with potential further damages to be assessed at trial, alongside legal fees.

Tether’s Defense

In response, Tether has dismissed the lawsuit as baseless and part of a “shake down.” The company claims that Celsius itself requested the liquidation after opting not to provide the necessary additional collateral. Tether asserts that it acted according to the agreed terms and fulfilled its obligations by closing out Celsius’ position, valued at approximately $815 million in USDT.

Tether has assured its stakeholders that the lawsuit poses no threat to its financial stability, citing its $12 billion in consolidated equity. The firm emphasized that even in the unlikely event of an adverse outcome, USDT holders would remain unaffected.

Damages Sought

Court documents indicate that Celsius is pursuing a substantial financial remedy. The total Bitcoin amount involved in the suit—57,428.64 BTC—is valued at approximately $3.48 billion based on the current market price of $60,627 per BTC as of August 10. The suit also demands a minimum of $100 million in additional damages, with the possibility of more, depending on trial outcomes.

The lawsuit marks a significant escalation in the legal battles following Celsius’ collapse, raising questions about the handling of collateral in volatile markets and the responsibilities of lenders in such scenarios.

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