U.S. Judge Allows Celsius’ $4B Bitcoin Lawsuit Against Tether to Proceed

A United States bankruptcy judge has given the green light for Celsius Network to proceed with its lawsuit against Tether, valued at billions of dollars. The case centers on allegations that Tether wrongfully liquidated Celsius’s Bitcoin holdings during the company’s downfall.

According to a recent court document, Celsius contends that Tether’s conduct violated multiple legal standards, including the lending agreement itself, principles of fair dealing under British Virgin Islands law, and provisions of the U.S. Bankruptcy Code that prohibit fraudulent asset transfers.

Celsius Claims Tether Broke Deal

Celsius accused Tether of dumping nearly 40,000 bitcoin (BTC) in a rushed sale back in June 2022 and used the funds to cover an $812 million debt, without adhering to the agreed-upon terms. 

The crypto lending platform was globally recognized, with its headquarters in Hoboken, New Jersey. The company maintained offices in four countries. Based on current bitcoin valuations, Celsius incurred losses exceeding $4 billion as a result of Tether’s liquidation of its holdings. 

Meanwhile, in August last year, Celsius Network filed another lawsuit against Tether. The legal complaint alleges that Tether mismanaged over $2 billion in BTC, thereby contributing to Celsius’s financial instability.

Court Lets Celsius Advance With Major Claims

The bankrupt crypto lender also mentioned that Tether failed to observe a contractual 10-hour hold period, liquidating Bitcoin collateral at an average price of $20,656, which is below the market value. Later, it routed the funds to its Bitfinex wallets.

Celsius added that despite Tether’s incorporation abroad, the company’s use of U.S. jurisdictions, communications systems, and financial accounts establishes a sufficient nexus to justify U.S. legal authority over the matter. 

After further hearing, the judge found that Celsius presented a reasonable basis for asserting that the transactions and alleged misconduct took place on U.S. soil. This action shoots down Tether’s argument that U.S. bankruptcy law shouldn’t apply to what it claims was a foreign action. 

Following the case, Tether filed a motion to dismiss the lawsuit, arguing that the U.S. court had no jurisdiction and that Celsius’s claims were legally insufficient. During this time, the judge dropped some of the charges, but Celsius still faces the major ones, including breach of contract and claims that Tether made unfair transfers. 

In early June of this year, Paolo Ardoino, Tether’s CEO, firmly stated that the company has no intention of initiating a public offering (IPO). His comments were in response to rumors circulating about a potential Tether IPO.

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