Tether, the company behind the stablecoin USDT, is preparing to defend itself against a lawsuit filed by the bankrupt crypto lender Celsius.
Celsius has asked the U.S. Bankruptcy Court of the Southern District of New York to order Tether to relinquish 57,428.64 Bitcoin (BTC), currently valued at around $3.3 billion. According to Celsius, Tether allegedly secured these funds through what it describes as “preferential and fraudulent transfers” during a critical period before Celsius filed for bankruptcy.
Celsius claims that these transactions were made with the knowledge of the impending bankruptcy, asserting that Tether insulated itself by securing additional collateral and liquidating it at a lower market price. The lender is also seeking $100 million in damages for Tether’s alleged contract breaches.
Tether Denies Allegations, Defends Its Position
Tether has completely rejected Celsius’s allegations, referring to this lawsuit as a “shakedown.” In a statement on its website, Tether stressed that Bitcoin was liquidated on Celsius’s initiative and with the lender’s consent in June 2022, during which time the crypto market experienced a significant drop.
In 2022, Tether made available USDt to some of its customers – including Celsius. Tether's arrangements with customers are very simple: Tether provides USDt to selected customers who provide an overcollateralization in Bitcoin.If the price of bitcoin (the collateral) falls… https://t.co/UuEs1ig8zr
— Paolo Ardoino (@paoloardoino) August 10, 2024
Furthermore, Tether disputed the numbers provided by the lawsuit indicating that it was Celsius who made decisions about liquidating BTC at prices determined by market conditions at that time.
Paolo Ardoino, CEO of Tether said:
“This is an empty lawsuit which seeks to compel us to return bitcoins obtained through sale of some of our holdings used to settle positions taken by Celsius. The claimant’s submissions are replete with several gaps and we are highly confident about both our contracts and actions.”
He also noted that they were ready to take this case to court to prevent “disgraceful money grabs.”
The core issue revolves around a loan agreement between Celsius and Tether that saw Celsius borrow stablecoins for business operations. According to Celsius, when Tether demanded additional collateral due to the mid-2022 market crash, it then liquidated Bitcoin held as collateral below the closing rate prices of such markets because it had taken advantage of those circumstances.
In their view, Tether “applied Celsius’s Bitcoin against obligations owed to it for an average price of $20,656.88 each,” which is below the June 13th 2022 closing market rate of $22,487.39.
In response, Tether argues that according to the agreement signed by both parties at inception; if more collateral was not posted by Celsius, their Bitcoins would be liquidated. Subsequently when additional BTC did not come through from Celsius’, Tether says it complied with instructions from them and commenced selling off these collaterals. They further assert that such action was within terms enshrined in the contract between them and that it was done in a manner open and legal.
Tether Assures Stability for USDT Holders
Tether has also sought to reassure its token holders, stating that even if the lawsuit does not go in their favour, it would not affect USDT’s stability. As of June 30, 2024, Tether Group’s consolidated equity was approximately $12 billion US dollars and according to Tether, this provides a substantial cushion against any probable financial liabilities emanating from the legal tussle.
The post Tether Battles Celsius in Court Over $3.3B Bitcoin Claim in Bankruptcy Case appeared first on Coinfomania.
