Celsius Sues Tether for $2.4 Billion Over Bitcoin Collateral

The bankrupt lending platform Celsius has filed a lawsuit against Tether, seeking compensation of 39,542 BTC (approximately $2.4 billion).

According to the document, the amount in question was collateral for a loan from the USDT stablecoin issuer. Tether requested additional collateral following a decline in Bitcoin’s price in early 2022.

Celsius complied with Tether’s request, but the collateral was again at risk. The lawsuit claims that while the lending platform was gathering funds within the contractually specified period, the USDT issuer liquidated the entire collateral within hours.

“Had Celsius been allowed to satisfy the request, as it was contractually entitled to, it could have avoided the sale of its bitcoins at the bottom of the crypto market. Instead, the position was closed in Tether’s favor,” the document states.

The lawsuit alleges that “amidst the chaos” on June 13, 2022, then-CEO of Celsius Alex Mashinsky supposedly gave Tether permission for an “orderly” liquidation of the collateral. However, the platform noted that the creditor never received the necessary written consent for these actions.

“We look forward to addressing this fabricated, baseless shakedown in court, which will benefit no one except the lawyers, bankers, and consultants involved in this criminal case,” responded Tether.

The company stated that instead of providing additional collateral, Celsius instructed Tether to liquidate the Bitcoin collateral to close a position worth approximately $815 million.

The lawsuit claims that in addition to the 39,542 BTC, Celsius also demanded 15,658 BTC and 2,228 BTC, which it allegedly provided as additional collateral. In total, this amounts to 57,428 BTC, valued at about $3.5 billion.

“Tether remains very confident that the whole process has been done properly, from the overcollateralization to the margin call and liquidation, at the direction of Celsius leadership,” stated Tether CEO Paolo Ardoino.

2. Tether remains very confident that the whole process has been done properly, from the overcollateralization to the margin call and liquidation, at the direction of Celsius leadership.

— Paolo Ardoino ?? (@paoloardoino) August 10, 2024

He also reiterated that Tether’s primary priority remains the safety of USDT users. According to Ardoino, the company’s capital stands at $12 billion, ensuring that even in the worst-case scenario, stablecoin holders will not be affected.

In February, it was revealed that Celsius will pay $3 billion to creditors as part of an approved restructuring plan.

The trial for the former platform head Alex Mashinsky is set for September 17, 2024. He will engage the same lawyers as the founder of the collapsed FTX, Sam Bankman-Fried.