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Background: After the mild verdict in Ripple's four-year legal battle with the SEC, the crypto sector faces another significant legal challenge. The bankrupt lending platform Celsius has filed a lawsuit against Tether, the stablecoin issuer, accusing it of large-scale misappropriation of assets.
Lawsuit Details: According to court documents, Celsius is demanding the return of 57,428.64 BTC, valued at nearly $3.4 billion at current prices. The dispute centers around a loan transaction during Celsius' bankruptcy process, where Tether lent a substantial amount of USDT to Celsius, with Celsius pledging 39,542.42 BTC as collateral.
Allegations: Celsius claims that due to the significant drop in Bitcoin's value, the lending platform was required to provide additional collateral in June 2022. However, Tether allegedly liquidated the pledged Bitcoin without giving Celsius a chance to meet the margin call. At the time, Bitcoin's price was hovering around $20,000, much lower than its current value.
Tether's Response: Tether has strongly refuted these allegations, labeling the lawsuit as "baseless" and describing it as an act of "extortion." In a blog post, Tether explained that the Bitcoin was liquidated at the prices of June 2022, following Celsius' instructions and with their consent. Tether claims to have lent approximately 815 million USDT during this period.
Ongoing Legal Battle: The total amount in question is not entirely clear. While Tether acknowledges the sale of 39,542 BTC, Celsius' lawsuit also seeks to invalidate two additional transactions from the same period, bringing the total disputed amount to 57,428.64 BTC.
Tether's Financial Position: Tether remains confident in its legal standing, citing its strong financial performance. In the second quarter of 2024, Tether reported record profits of $1.3 billion, contributing to over $5.2 billion in profit for the first half of the year. Tether reassures its token holders that even in the unlikely event of an adverse legal outcome, they will not be affected.
Celsius' Collapse: The downfall of Celsius was one of the most dramatic events in the crypto space in 2022. The lending platform filed for bankruptcy in the summer, with liabilities of $5.5 billion far exceeding its assets by $1.2 billion. The former Celsius CEO, Alex Mashinsky, is currently out on bail set at $40 million, with his trial scheduled for September.
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