Celsius Sues Tether for $3.5B, Alleges Misappropriation of Assets

Defunct cryptocurrency exchange Celsius has filed a lawsuit against Tether alleging misappropriation of assets and seeking approximately $3.5 billion in BTC returns

Bankrupt cryptocurrency exchange Celsius has filed a lawsuit against Tether, alleging that the stablecoin issuer misappropriated its assets and seeking approximately $3.5 billion in BTC returns, damages, and legal fees.

Celsius filed for Chapter 11 bankruptcy protection in July 2023, and the legal battle with Tether stems from events that transpired during the bankruptcy proceedings.

According to the lawsuit, Celsius borrowed a specific amount of USDT from Tether during the bankruptcy proceedings and sent 39,542.42 BTC to Tether as collateral.

As the price of Bitcoin dropped, Celsius was required to provide further collateral to avoid liquidation, as per the two parties’ agreement.

However, Celsius alleges that Tether liquidated the BTC at a price point that almost exactly covered the debt without giving Celsius the opportunity to provide additional collateral.

In response to the lawsuit, Tether has called the proceedings a “shake down” and pledged to “vigorously defend” itself against “unwarranted allegations.”

Tether claims that Celsius requested the selloff after choosing not to provide additional collateral, and that the company is attempting to shift blame for its own poor decisions.

“Celsius chose to sell its digital assets and repay the loan early rather than post additional collateral. Now, Celsius is attempting to use the legal system to shake down Tether and saddle Tether with the responsibility for Celsius’ own decisions,” Tether stated in a recent blog post.

While Tether has left no doubt about its commitment to fighting the suit, it’s also been quick to reassure USDT stakeholders. Citing its $12 billion in consolidated equity, the company stated that “even in the most remote scenario in which this baseless lawsuit will get somewhere, Tether token holders will not be impacted.”

The exact amount Celsius seeks appears to be in question. The number currently being reported throughout the crypto community, and cited in Tether’s blog post, accounts for 39,542.42 BTC, worth about $2.4 billion as of Aug. 10.

However, according to page 28 of the legal filing, the plaintiffs also want two other transfers made during the same period voided.

As part of the suit’s “prayer for relief,” the plaintiffs ask the court to “require Defendants to relinquish to Plaintiffs the 15,658.21 Bitcoin, 2,228.01 Bitcoin, and 39,542.42 Bitcoin preferentially transferred by Plaintiffs to Defendants” or its current dollar value.

Together, those three transfers amount to 57,428.64 Bitcoin. As of Aug. 10, at a price of $60,627 per BTC, Celsius is apparently seeking approximately $3.48 billion in Bitcoin.

Furthermore, the Celsius suit also seeks no less than $100 million in damages “plus additional damages to be determined at trial” and legal fees.