Celsius Network Sues Tether Over Contract Dispute
In a legal battle stemming from a contract dispute dating back to 2022, Celsius Network has taken legal action against Tether, the company responsible for the USDT stablecoin. The lawsuit alleges that Tether violated their agreement by selling off 39,542.42 Bitcoins that served as collateral for a loan issued in USDT, which Celsius deems improper and a breach of the loan agreement.
Celsius Network’s Legal Dispute with Tether
The conflict between Celsius Network and Tether began following a Bitcoin crash in 2022, leading to Celsius filing for bankruptcy in July of the same year. The core of the legal dispute revolves around an updated agreement reached in January 2022, allowing Celsius to borrow USDT from Tether with collateral in Ether, Tether Gold, or Bitcoin.
- The revised agreement enabled Celsius to secure nearly $2 billion in USDT from Tether using tens of thousands of Bitcoins as collateral.
- Tether was required to provide notice and wait 10 hours if the collateral’s value dropped below a specific threshold according to the new agreement.
Tether’s Alleged Breach of Agreement
However, following Bitcoin’s crash earlier in the year, the value of the Bitcoin collateral held by Tether plummeted as well. Consequently, Tether demanded Celsius to post additional collateral, resulting in a transfer of 15,658.21 Bitcoins and 2,228.01 Bitcoins of excess collateral for another loan.
- Despite the agreement’s provision to wait for ten hours, Tether reportedly liquidated the entire Bitcoin collateral on June 13, 2022, negating Celsius’ opportunity to address the demand within the stipulated period.
- This action led to Celsius losing its residual interest in the collateral, with Tether using the 39,542.42 Bitcoin as collateral to cover its exposure fully.
Tether Responds to Lawsuit
At the time, the 39,542 BTC collateral mentioned in the lawsuit was valued at around $800 million; however, with Bitcoin’s increased value since then, the collateral is currently valued at over $2 billion.
In response to the lawsuit, Tether dismissed the claims as baseless and referred to Celsius Network’s $2.4 billion BTC claim as a “shameless litigation money grab” that it will resist. The lawsuit also requests the return of an additional 15,658.21 Bitcoins and 2,228.01 Bitcoins from a top-up transfer, raising the total claimed value to over $3.5 billion at current Bitcoin prices.
Tether’s Recent Milestone
On a separate note, Tether’s USDT achieved a new milestone with a $115 billion market cap recently, signaling a significant achievement in the stablecoin’s market presence.
By
By
By
By