As a seasoned crypto investor with a knack for navigating the stormy seas of digital finance, I find myself standing on the precipice of yet another intriguing development in this ever-evolving landscape: Celsius Network’s lawsuit against Tether. Having weathered multiple market crashes and witnessed firsthand the resilience and volatility of the crypto sphere, I can attest that such legal battles are far from uncommon.
Crypto lending company Celsius Network has taken Tether, the firm behind the USDT stablecoin, to court over a disagreement about a contract from 2022. The lawsuit claims that Tether broke their promise by selling off 39,542.42 Bitcoins, which were kept as security for a loan given in USDT, without valid reason. Celsius believes this action was inappropriate and a violation of the terms of the loan agreement.
Celsius Files Lawsuit Against Tether
In early 2022, a disagreement between Celsius Network and Tether started following a crash in Bitcoin prices. This conflict eventually led to Celsius filing for bankruptcy in July 2022. The crux of the legal dispute revolves around an updated agreement signed in January 2022, which allowed Celsius to borrow USDT from Tether using Ether, Tether Gold, or Bitcoin as collateral for the loan.
At a time when it was heavily borrowing, Celsius had obtained almost $2 billion worth of USDT from Tether, by pledging tens of thousands of Bitcoins as security.
Under the new terms, Tether must provide notice and wait 10 hours if the worth of their collateral drops below a particular level. Unfortunately, Bitcoin’s decline in early 2022 also affected the value of Bitcoin assets that Tether holds, causing it to decrease as well.
In response to this request, Tether asked Celsius to provide additional security in the form of collateral. To meet this requirement, Celsius transferred 15,658.21 Bitcoin and an additional 2,228.01 Bitcoin as excess collateral for another loan.
According to the allegation, it’s claimed that on June 13, 2022, Tether asked for more collateral. However, instead of waiting the agreed ten hours as required by the contract, Tether reportedly went ahead and liquidated all the Bitcoin collateral right away without giving Celsius the necessary time to respond to the demand.
“In the lawsuit, it’s stated that Tether utilized all 39,542.42 Bitcoin that Celsius had deposited as collateral, applying them to cover their own liabilities completely. This action, however, eliminated any remaining claims Celsius had on the Bitcoin collateral.”
Lawsuit Is Baseless, Tether Says
In the past, the collateral that Celsius was trying to get refunded amounted to approximately 39,542 BTC, which was equal to about $800 million at that time. But since then, Bitcoin’s value has risen significantly, and today that same collateral is worth over $2 billion.
To counter this, Tether dismissed the lawsuit as unfounded. Furthermore, the stablecoin firm acknowledged Celsius Network’s $2.4 billion Bitcoin claim, but characterized it as yet another attempt at using lawsuits for financial gain, a tactic they firmly refuse to fall for.
Furthermore, the lawsuit seeks not only compensation but also the recovery of an extra 15,658.21 Bitcoins and 2,228.01 Bitcoins from a recent deposit, pushing the total requested value to more than $3.5 billion at current Bitcoin rates.
In other news, Tether’s USDT recently crossed a new milestone of a $115 billion market cap.
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2024-08-11 21:04