BREAKING: Judge Approves Celsius’s $4B Legal Battle Against Tether—Crypto’s High-Stakes Showdown Begins

The crypto courtroom drama just leveled up—Celsius gets the green light to take on Tether in a $4 billion clash that could shake stablecoin foundations.

Here’s the kicker: No one’s holding back. This isn’t just a lawsuit; it’s a reckoning for an industry that’s been playing fast and loose with 'stable' valuations. Will Tether’s reserves hold up under scrutiny, or is this the moment the house of cards wobbles?

Meanwhile, Wall Street watches with popcorn—because nothing spices up a slow trading day like crypto’s version of a debt-ceiling standoff.

Celsius Alleges Tether Breached Deal, Committed Fraudulent Transfers

Celsius argued that Tether’s actions breached their lending agreement, violated principles of good faith under British Virgin Islands law, and amounted to fraudulent and preferential transfers avoidable under US bankruptcy rules.

The dispute centers on a margin call Tether issued as Bitcoin prices fell sharply.

Celsius claimed that Tether sold its collateral before a required 10-hour waiting period, offloading the BTC at an average price of $20,656, before transferring the assets to its own Bitfinex accounts.

Celsius said the rushed liquidation deprived it of BTC now worth more than $4 billion.

The lender also argued Tether’s actions involved US-based communications, personnel, and bank accounts, giving American courts jurisdiction despite Tether being incorporated offshore.

The judge sided with Celsius, finding the alleged misconduct sufficiently “domestic” in nature to keep key claims alive, including breach of contract, fraudulent transfer, and preference allegations.

Tether loses bid to dismiss Celsius suit seeking to reclaim what is now over $4B of BTC that Tether took from Celsius as it fell into bankruptcy

Being offshore doesn’t allow you to evade US courts – especially when virtually all Tether’s assets are sitting in the US#Tether pic.twitter.com/rdshox2n0c

Last year, Tether sought to dismiss the case outright, arguing the US court had no jurisdiction and that Celsius’s claims were invalid.

While the judge dismissed some counts, the Core allegations were allowed to proceed.

Celsius filed for bankruptcy in July 2022, leaving around $4.7 billion in user assets locked on the platform.

In April, the US Department of Justice (DOJ) sought a 20-year prison sentence for Alex Mashinsky, the former CEO of bankrupt crypto lending platform Celsius, for orchestrating a “years-long campaign of lies and self-dealing” that defrauded thousands of investors.

Federal prosecutors urged the court to impose a two-decade sentence, citing Mashinsky’s central role in a scheme that left customers unable to access nearly $4.7 billion in cryptocurrency when Celsius froze withdrawals in June 2022.

Judge Bars Mashinsky From Celsius Payouts

Last month, a US bankruptcy judge blocked Mashinsky from claiming any share of the failed crypto lender’s bankruptcy proceeds.

The ruling, entered June 16, 2025, disallows claims from Mashinsky and his entities, freeing up funds for creditor payouts under Celsius’s Chapter 11 plan.

Celsius creditors, who have already received over $2.5 billion in distributions, will benefit as reserved cash, crypto, and MiningCo shares are released.

The decision follows a May 2025 agreement between Mashinsky and the Celsius litigation team.