Celsius Advances in $4 Billion Bitcoin Lawsuit Against Tether

By: Isha Das

The ongoing legal battle between Celsius Network and Tether has taken a significant turn as a US Bankruptcy Court ruled in favor of Celsius on several claims against the stablecoin issuer. This ruling permits Celsius to continue with allegations that Tether violated bankruptcy laws by performing preferential transfers and liquidating a substantial amount of Bitcoin ahead of Celsius's collapse in 2022.

The court's decision centers around more than 57,000 Bitcoins, currently valued at approximately $4 billion. Celsius argues that these Bitcoins were either improperly seized, liquidated prematurely, or transferred in breach of their loan agreement. The court has allowed Celsius to pursue claims for avoidance of preferential transfers, fraudulent transfers, and breach of contract over the supposed premature liquidation of collateral. One critical aspect that will be examined further is Tether's purported fire sale of 39,500 Bitcoins worth hundreds of millions of dollars without adhering to a contractual 10-hour notice period, allegedly selling them at a discount internally, which Celsius claims caused over $100 million in losses.

Despite the ruling in favor of Celsius's main claims, the court dismissed certain claims that were outside its jurisdiction, including allegations against specific Tether entities. The judge found no liable breach under British Virgin Islands law concerning Tether's duty of good faith and fair dealing. Nonetheless, the case's progress highlights its potential to become one of the most consequential asset recovery cases within the cryptocurrency sphere, setting a precedent on how liquidation proceedings and bankruptcy claims within crypto contracts are handled.

This substantial legal progress provides Celsius an opportunity to address the financial repercussions of what they see as unauthorized actions by Tether, potentially reshaping creditor positions and financial recoveries post-bankruptcy. The outcome of this case could significantly impact the industry’s approach to contract fulfillment and asset management, especially concerning loan agreements that involve volatile cryptocurrencies such as Bitcoin.