Tether said it will fight Celsius’ “baseless” lawsuit against it and in any scenario Tether token holders will not be impacted.
Bankrupt crypto lender Celsius sued Tether for fraudulently securing itself as part of a loan agreement.
Tether, the company behind USDT, the world’s largest stablecoin by market capitalization, said it will defend itself against what it called “shakedown” litigation brought by bankrupt crypto lender Celsius.
On Friday, Celsius asked the U.S. Bankruptcy Court of the Southern District of New York to order Tether to relinquish a total of 57,428.64 bitcoin (BTC) or award the “present value of all Bitcoin,” some $3.3 billion at today’s price, according to a court filing.
“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,” Tether said in a statement on its website. Tether did not say how it calculated the $2.4 billion figure.
The case concerns a loan agreement between Celsius and Tether that allowed Celsius to borrow stablecoins “to operate certain critical aspects of its business,” according to the lawsuit. In the filing, Celsius alleges that when the market crashed in mid-2022, in the “ninety-day period prior” to Celsius’ bankruptcy filing, Tether insulated itself from the impending bankruptcy by making “preferential and fraudulent transfers” of bitcoin.
“Specifically, on several occasions, Tether demanded, and received, a significant amount of new, incremental collateral to improve its position in the impending bankruptcy,” according to the lawsuit.
“This baseless lawsuit is trying to claim that we should give back the bitcoin that were sold to cover Celsius’ position,” Tether CEO Paolo Ardoino said in a post on X. “There are plenty of flaws in the claimant’s filing and we’re very confident in the solidity of our contract and our actions … This lawsuit will be fought till the end. It’s important to set an example on behalf of the entire industry that shameless money grabs will not work.”
Celsius argued that in June 2022, Tether “applied Celsius’s Bitcoin against obligations owed to it for an average price of $20,656.88 each—considerably less than Bitcoin’s market closing price on June 13th, $22,487.39.”
“Thus, these preferential and fraudulent transfers of Bitcoin should be avoided, and the Bitcoin or its value should be recovered for the benefit of Celsius’s estate,” the filing said. It also demands $100 million in damages for breaches of contract.
According to Tether, when the market crashed, the agreement required “Celsius to post additional collateral to avoid the liquidation of its BTC” and “when Celsius chose not to post additional BTC it directed Tether to liquidate the BTC collateral Tether held.”
Tether also said that the consolidated equity of the Tether Group was nearly $12 billion as of June 30, so “even in the most remote scenario in which this baseless lawsuit will get somewhere, Tether token holders will not be impacted.”
