Tether Slams Celsius’ $3.4B ‘Shakedown’ Suit, Vows to Defend USDT
Tether refutes Celsius claim that it violated its loan contract. (Photo by Win McNamee/Getty Images)
- The total damages Celsius is requesting from Tether is approximately $3.4 billion.
- Tether claims Celsius was the one to request the liquidation after repeated requests to post collateral.
Defunct crypto lender Celsius is seeking billions from stablecoin giant Tether (USDT), alleging that the firm violated the terms of their loan contract following the liquidation of tens of thousands of Bitcoin (BTC) in a loan deal.
Conversely, Tether claims that Celsius requested liquidation, as well as the prices and the time of the selloff.
Celsius Sues
On Aug. 9, 2024, defunct crypto lender Celsius Network filed a lawsuit against the world’s largest stablecoin issuer, Tether. The lawsuit alleges that the firm wrongfully liquidated billions worth of Bitcoin (BTC) collateral in June 2022.
“Tether forged ahead with an improper application of 39,542.42 Bitcoin—the entirety of collateral that Celsius had posted——using the pledged Bitcoin to cover its exposure in full, but destroying Celsius’s residual interest in the collateral,”
More specifically, the suit calls back to a 2022 agreement in which Tether loaned USDT to Celsius, with the latter using BTC as collateral. As BTC’s price wavered and began collapsing in June 2022, Celsius was toppled by a margin call as its collateral was no longer sufficient for the loans.
The agreement stipulated that Celsius needed to post additional collateral within 10 hours if BTC fell below a certain price. Celsius argues that the collateral application was a fraudulent transfer and was not permitted under bankruptcy legislation.
It also says that Tether liquidated the BTC at a price point that almost perfectly covered the debt, though without giving Celsius a chance to provide extra collateral. Celsius is seeking relief of $2.4 billion in BTC from Tether and an additional $1 billion in reliefs and damages.
Tether Responds
On Saturday, Aug. 10, Tether issued a statement that pledged that it would not become the victim of “shameless litigation” by Celsius. Firstly, it begins by arguing that Celsius chose not to post additional collateral in order to close the $815 million USDT position.
Further taking the lawsuit to task, Tether CEO Paolo Ardoino wrote to X :
“This complaint shows a lack of basic understanding of the concepts of market slippage, block liquidation and risk management. Very poor arguments made. Also the liquidation was directed by Celsius management team and agreed each step in the way.“
Tether also alleges that it did not liquidate Celsius’ position as it violated the contract. Instead, Celsius was the one to request the sale after choosing not to post the extra collateral. It adds:
“Rather than recognize the clear validity of the agreement entered into years before Celsius’ bankruptcy, this lawsuit seeks to improperly impose the costs of Celsius’ mismanagement and failure on Tether.”
The news comes just one month after Celsius filed a complaint to claw back some $100 million in pre-bankruptcy withdrawals from wealthy account holders.
Tether Confidence
The stablecoin behemoth is undeterred by the litigation. Tether boss Ardoino added that the firm is “very confident” that they properly and legally managed the entire process.
“[…]from the overcollateralization to the margin call and liquidation, at the direction of Celsius leadership.”
However, the community has bit back, and have highlighted that the court documents suggest that Celsius’ 10-hour window to post collateral was not respected, others seem to think Tether was an irresponsible lender given all the rumors and negative press surrounding Celsius’ money flows.
In his response, Ardoino states that chat logs prove Celsius personnel confirmed sales prices and he is “ready” to prove that in court.
Tether Thrives Despite EU Exit, Reports $5.2 Billion Profit in H1 2024
US Files Action to Recover $2.5 Million in USDT Lost to ‘Pig Butchering’ Scams
