Defunct cryptocurrency lender Celsius Network has filed multiple lawsuits against several blockchain companies in an attempt to recover billions of dollars in funds for its creditors.
On Friday, August 10, 2024, Celsius filed a lawsuit against Tether, accusing the Stablecoin issuer of improperly selling Bitcoin worth $2.4 billion at the bottom of the market during Celsius’ collapse. Celsius claims it had acquired collateral loans from Tether and alleges that Tether sought additional collateral in early 2022, which Celsius transferred in the form of BTC on different occasions between May and June. Tether has described the lawsuit as baseless and bullying, stating that they will defend themselves against the “unjust litigation”.
Celsius also filed a lawsuit against Bancor DAO on July 12, 2024, claiming that the protocol’s impermanent loss protection mechanism was flawed from the start. The lawsuit alleges that the process by which the impermanent loss protection was passed as an emergency measure was improper, and as the protocol struggled, Celsius sought to withdraw funds.
Two additional lawsuits filed in July target Badger DAO and Compound Labs for losses Celsius incurred following a hack of Badger DAO and an oracle-related liquidation incident on Compound. The lawsuit against Badger DAO targets the protocol’s founder, Christopher Spadafora, for touting the security of the protocol and Cloudflare, a service provider, for lacking reasonable safeguards, leading to a $120 million exploit in December 2021.
The lawsuit against Compound Labs alleges that the company used a single price feed from Coinbase Pro as the sole source of information for its oracle, leading to a massive spike in liquidations when the price of the Stablecoin DAI increased to $1.30.
