Tether, the firm behind the USDT stablecoin, has come out swinging against a lawsuit filed by the beleaguered crypto lender, Celsius Network. Celsius, now in bankruptcy, is pursuing $2.4 billion in damages from Tether over the liquidation of Bitcoin collateral that secured a significant loan.
Tether wasted no time in dismissing the lawsuit, branding it a “baseless shakedown” attempt. The company accuses Celsius of trying to deflect responsibility for its financial woes onto Tether, categorically denying any misconduct in the handling of the collateral.
The conflict traces back to a loan agreement between Celsius and Tether. Celsius had borrowed $1.823 billion in USDT, securing the loan with $2.612 billion worth of Bitcoin. As Bitcoin prices plummeted, Celsius failed to post the necessary additional collateral, forcing Tether to liquidate the Bitcoin to settle the outstanding debt.
Now under Chapter 11 bankruptcy protection, Celsius claims that Tether’s liquidation was “precipitous and unlawful,” arguing that the company did not provide sufficient notice before seizing the collateral. Celsius alleges that Tether’s actions resulted in significant losses, prompting the demand for $2.4 billion in damages.
In a forceful rebuttal, Tether’s Chief Technology Officer, Paolo Ardoino, dismissed the lawsuit as a desperate “shakedown” tactic. Ardoino stated that Celsius is merely attempting to “shift blame for its own failures and management malpractice.” He also clarified that Tether had never borrowed from Celsius and that the company’s involvement was limited to holding collateral that exceeded the loaned amount.
This legal battle raises critical questions about the treatment of digital assets in insolvency cases and the establishment of security interests in cryptocurrency transactions. Legal experts suggest that the outcome could set a precedent for how security interests over crypto assets are recognized and prioritized in future cases.
