Legal Battle Between Celsius and Tether Over $800M BTC Liquidation
Recently, Celsius has taken legal action against Tether in an attempt to recover more than $800 million due to an alleged incorrect liquidation of BTC. Tether swiftly responded, dismissing the lawsuit as an unfounded attempt and asserting its determination to defend itself.
Celsius Files Lawsuit Against Tether
The lawsuit, initiated on August 9 in the US Bankruptcy Court for the Southern District of New York, claims that two years ago, Tether violated its contract with Celsius. In 2020, the two organizations engaged in a loan agreement that permitted the prominent crypto lender to borrow USDT and EURT at favorable interest rates by providing collateral in BTC.
- The lawsuit alleges that during the bear market peak in mid-2022, Tether demanded additional collateral from Celsius.
- 16,700 BTC was transferred by Celsius to Tether, enhancing the latter’s creditor position unfairly as per the lawsuit.
- Tether requested added collateral on June 13, 2022, allowing Celsius ten hours to deposit the funds.
According to the lawsuit, Tether prematurely used the entirety of Celsius’s collateral of 39,542.42 Bitcoin, not waiting for the ten-hour stipulated deadline, which damaged Celsius’s interests severely.
Tether’s Response to Lawsuit
Following the lawsuit’s filing, Tether and its CEO Paolo Ardoino issued a statement to counter the claims. Ardoino clarified that Tether only provides USDT to customers who overcollateralize in BTC, with the right to liquidate positions if collateral values fall below the margin call price.
- Tether sold Bitcoin held as collateral for Celsius once BTC prices dropped in mid-2022, contrary to Celsius’s assertions.
- Tether managed to return excess funds to Celsius after liquidating the BTC.
Ardoino dismissed the lawsuit as baseless, emphasizing Tether’s confidence in its contractual actions. Tether’s official statement deemed the legal action a meritless shakedown benefiting only legal and financial professionals.
In reassurance to Tether token holders, Ardoino highlighted the company’s robust equity of nearly $12 billion, ensuring minimal impact from the lawsuit even if it progresses.
Hot Take: Understanding the Celsius-Tether Legal Dispute
The legal dispute between Celsius and Tether regarding BTC liquidation showcases the complexities of loan agreements and collateral management in the volatile crypto market. Both parties have presented contrasting accounts of the events leading to the liquidation, highlighting the importance of clear contractual terms and communication in such transactions.
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