Celsius Scores Green Light to Launch $4B Legal Bombshell Against Tether for BTC Fire Sale
Celsius just got the judge's nod to drop a $4 billion lawsuit on Tether—and the crypto world's bracing for shockwaves.
When stablecoins and bankruptcy collide
The failed crypto lender claims Tether's Bitcoin dump torpedoed its recovery—because nothing says 'market stability' like two distressed giants duking it out in court. Tether's lawyers are already sharpening their knives, while traders place bets on whether this ends in settlements or scorched earth.
Bonus jab: Nothing unites crypto like a good old-fashioned blame game—especially when there's $4B worth of 'who screwed who' to litigate.
TLDR
- A U.S. bankruptcy court has permitted Celsius to proceed with a $4 billion lawsuit against Tether.
- Celsius alleges that Tether breached a contract by prematurely liquidating 39,500 Bitcoin during its insolvency.
- The liquidated Bitcoin was used to recover an $812 million loan that Celsius had defaulted on.
- Celsius claims the sale violated a 10-hour waiting period that was specified in the agreement with Tether.
- Judge Martin Glenn rejected Celsius’ argument to apply British Virgin Islands law to the case.
A U.S. bankruptcy court has authorized Celsius to proceed with a $4 billion lawsuit against Tether. Celsius alleges that Tether violated a key agreement by liquidating 39,500 BTC held as loan collateral. The lawsuit now enters a critical phase as both parties prepare for discovery.
Tether Liquidation of Bitcoin Faces Legal Scrutiny
Celsius claims that Tether acted improperly by liquidating Bitcoin assets before the contractual 10-hour waiting period expired. The assets were reportedly sold to recover an $812 million loan as Celsius was nearing collapse. However, Celsius maintains the sale breached contract terms and seeks damages based on current BTC value.
Tether, which held the bitcoin as security, sold the coins quickly during Celsius’ insolvency crisis in 2022. Celsius argues that Tether’s actions were premature and caused greater losses for its bankruptcy estate. The dispute now centers on whether Tether breached its agreement or acted within its rights.
Although Tether disputes any wrongdoing, the court allowed Celsius to continue with its claims. The decision enables Celsius to demand records and internal communication from Tether in the next stage. These records could clarify the decision-making behind the $4 billion BTC liquidation.
Questions Around Use of Funds and Legal Jurisdiction
Celsius has repaid a large portion of its creditors, raising uncertainty about how any recovered funds WOULD be used. With over 93% of claims settled, the motivation behind the lawsuit appears focused on alleged contractual violations. Still, creditor representatives express interest in uncovering Tether’s internal procedures during the collapse.
The bankruptcy judge dismissed Celsius’ argument that British Virgin Islands law should apply, limiting claims to U.S. jurisdiction. Celsius had pointed to Tether’s offshore subsidiaries, but the court ruled U.S. law governs the case. This narrows the legal framework under which Celsius can present evidence.
Despite this, Celsius continues to push for further examination of Tether’s actions. The discovery process may yield insight into whether the liquidation was lawful or hasty. Stakeholders insist that the timeline and decision behind the sale need a thorough investigation.
Legal Battle May Impact Broader Crypto Ecosystem
The lawsuit represents one of the most significant ongoing disputes involving Tether. With $4 billion at stake, the case has important implications for crypto-backed lending agreements. Celsius believes enforcement of contract terms remains vital even after insolvency.
Tether’s CEO has described the lawsuit as meritless, signaling that the company will defend its position vigorously. Yet the court’s ruling indicates enough merit exists to warrant a full hearing. The legal community and crypto observers await the outcome of this high-profile battle.
