Tether Vows to 'Fight Till the End' as Celsius Sues to Recover $3.3B in Bitcoin

The legal battle, which has escalated tensions in the crypto world, involves a demand from Celsius for the return of 57,428.64 bitcoin (BTC) or an equivalent $3.3 billion in today's market value.

Crypto Lender Celsius Sues Tether for $3.3B Over Bitcoin Liquidation

Bankrupt crypto lender Celsius has filed a lawsuit against Tether, demanding the return of 57,428.64 bitcoin (BTC) or an equivalent $3.3 billion in today’s market value.

The lawsuit, filed on Friday in the U.S. Bankruptcy Court of the Southern District of New York, relates to a loan agreement between Celsius and Tether. Celsius alleges that during the 2022 market crash, Tether took steps to insulate itself from Celsius’ impending bankruptcy by demanding and receiving a significant amount of collateral, which it then liquidated.

According to Celsius, these actions, which involved the transfer of bitcoin during the critical ninety-day period leading up to its bankruptcy filing, constituted “preferential and fraudulent transfers.”

However, Tether disputes this characterization of events. In a statement posted on its website, the company highlights that the liquidation of the bitcoin collateral was carried out at Celsius’ direction and with its consent at June 2022 prices, which amounted to $2.4 billion at the time. Tether claims that this figure was agreed upon by both parties.

Tether CEO Paolo Ardoino has dismissed the lawsuit as baseless, stating, “This lawsuit incredibly now seeks the return of approximately US$2.4 billion worth of BTC from Tether, despite the BTC being liquidated at Celsius’ direction and with Celsius’ consent at June 2022 prices.”

Ardoino, who recently transitioned to the role of Tether’s CEO after serving six years as CTO, took to X (formerly Twitter) to defend Tether’s actions, vowing to fight the lawsuit “till the end.” He added, “It’s important to set an example on behalf of the entire industry that shameless money grabs will not work.”

Tether also sought to reassure its token holders, stating that even in the unlikely event the lawsuit progresses, its nearly $12 billion in consolidated equity as of June 30 ensures that USDT holders will remain unaffected.

Celsius, which officially exited bankruptcy after a court-approved reorganization plan in November, argues in its filing that Tether's actions resulted in substantial financial losses for the bankrupt lender.

Celsius claims that Tether applied Celsius’ Bitcoin collateral at an average price of $20,656.88 per BTC, which is significantly lower than the market closing price of $22,487.39 on June 13, 2022. Celsius is also seeking $100 million in damages for what it describes as breaches of contract.

This legal battle unfolds as Tether boasts of strong financial performance, reporting a remarkable $5.2 billion in profit for the first half of 2024. The company's revenue, primarily driven by its stablecoin operations, has seen a surge as rising interest rates increase the yield on the short-term U.S. government bonds that form a substantial part of Tether's reserve.

With its growing cash reserves, Ardoino has been channeling surplus profits into new ventures, such as investments in AI and data infrastructure through Tether's venture arm, Tether Evo.

Under Ardoino's leadership, Tether has already acquired a majority stake in neural implant technology startup Blackrock Neurotech and invested in the data center operator Northern Data Group, whose infrastructure supports AI model training. These moves indicate Tether's ambition to diversify and challenge tech giants like Microsoft, Google, and Amazon.

Despite its financial success and growth aspirations, Tether remains a controversial figure in the crypto world. The company has faced scrutiny over the composition of its reserves, settling with U.S. regulators for $41 million in 2021 for making misleading statements. Tether has also been accused of using fraudulent means to secure banking services and has been linked to money laundering and terrorist financing, which the company has consistently denied.

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