Thomas Daniels
In a critical ruling for crypto jurisprudence, a U.S. bankruptcy judge has authorized Celsius Network to move forward with its $4 billion lawsuit against stablecoin issuer Tether. The decision enables key claims—breach of contract, fraudulent transfer, and preferential treatment—to proceed in federal court.
The suit centers on Tether’s alleged liquidation of 39,500 Bitcoin in June 2022, executed during a period of extreme market volatility. Celsius contends the sale was conducted hastily and below market value—at an average price of $20,656 per Bitcoin—without observing the 10-hour notice period stipulated in the lending agreement.
Celsius, which has since exited Chapter 11 bankruptcy, claims that Tether used the proceeds to offset an $812 million debt, circumventing agreed procedures and violating the duty of good faith under British Virgin Islands law. The firm estimates the losses incurred from the transaction at $4 billion based on current Bitcoin prices.
Tether, domiciled in the British Virgin Islands and Hong Kong, argued for dismissal on the grounds that the lawsuit lacked jurisdiction and legal merit. However, the court found that Celsius had sufficiently demonstrated domestic ties—including the use of U.S.-based personnel and financial infrastructure—to establish jurisdiction under U.S. bankruptcy law. While some claims were dismissed, the court declined to strike down the central allegations.
The decision marks a notable development in the ongoing scrutiny of crypto-lending practices and collateral management. Celsius’s claim highlights the mounting legal risks for stablecoin issuers operating within the opaque infrastructure of global crypto markets.
Tether: No IPO, Growing Bitcoin Position
Separately, Tether CEO Paolo Ardoino recently quashed speculation around a public listing, calling a potential $515 billion valuation “a beautiful number,” but confirming that no IPO is planned. He emphasized that the company’s Bitcoin and gold reserves add intrinsic value that the market may underestimate.
Tether continues to expand its digital asset footprint, recently acquiring a controlling stake in Jack Mallers’ Twenty One Capital. With a reported transfer of over 37,200 BTC—valued near $3.9 billion—Tether now ranks among the world’s top three corporate Bitcoin holders.
Strategic Implications
This case underscores the evolving tension between traditional legal frameworks and decentralized finance. The court’s willingness to treat crypto transactions as subject to U.S. legal jurisdiction—even when conducted by offshore entities—sets a significant precedent. As institutional crypto players like Tether consolidate assets and deepen U.S. exposure, regulatory clarity and contractual enforceability will become increasingly central to operational risk management.
