Celsius Sues Tether for $3.5 Billion

The now-defunct cryptocurrency exchange Celsius has filed a lawsuit against Tether, accusing the company of asset misappropriation and seeking around $3.5 billion in Bitcoin returns, damages, and legal fees.

Tether has indicated that Celsius is demanding the return of approximately $2.4 billion worth of Bitcoin (BTC) in the lawsuit.

However, court documents show that Celsius is actually requesting 57,428.64 BTC or its equivalent in dollars at the current market rate, in addition to damages and legal fees.

The lawsuit claims that during Celsius’ bankruptcy proceedings, Tether provided it with a loan in Tether (USDT), the company’s USD-backed stablecoin.

In exchange for this loan, Celsius allegedly sent Tether 39,542.42 BTC as collateral.

As Bitcoin’s price declined, Celsius was reportedly required to provide additional collateral under the terms of their agreement to avoid liquidation.

The lawsuit alleges that Tether liquidated the BTC at a price that nearly covered the debt without giving Celsius the opportunity to provide the additional collateral.

Tether has dismissed the lawsuit as baseless, describing it as a “shake down” and pledging to “vigorously defend” itself against the “unwarranted allegations,” according to a recent blog post.

Tether asserts that it was actually Celsius that requested the liquidation after deciding not to provide further collateral:

“When Celsius chose not to post additional BTC it directed Tether to liquidate the BTC collateral Tether held in order to close out its roughly 815 million USD₮ position with Tether.”

While Tether has made it clear that it intends to fight the lawsuit, it has also reassured USDT stakeholders.

The company, citing its $12 billion in consolidated equity, emphasized that “even in the most remote scenario in which this baseless lawsuit will get somewhere, Tether token holders will not be impacted.”

The exact amount Celsius is seeking appears to be under dispute.

The figure being widely reported, and mentioned in Tether’s blog post, corresponds to 39,542.42 BTC, valued at about $2.4 billion as of Aug. 10.

However, on page 28 of the legal filing, Celsius also seeks to have two additional transfers made during the same period voided.

In the lawsuit’s “prayer for relief,” the plaintiffs request that the court “require Defendants to relinquish to Plaintiffs the 15,658.21 Bitcoin, 2,228.01 Bitcoin, and 39,542.42 Bitcoin preferentially transferred by Plaintiffs to Defendants” or their equivalent value in U.S. dollars.

These three transfers total 57,428.64 Bitcoin. As of Aug. 10, at a price of $60,627 per BTC, Celsius is seeking approximately $3.48 billion in Bitcoin.

Additionally, the lawsuit also seeks at least $100 million in damages “plus additional damages to be determined at trial” and legal fees.

Sources:

https://cointelegraph.com/news/celsius-sues-tether-seeking-3-5b-over-bitcoin-collateral-selloff

https://tether.io/news/tether-will-defend-itself-against-shake-down-litigation-commenced-by-celsius/

https://cases.stretto.com/public/x191/11749/PLEADINGS/1174908102480000000001.pdf

https://tether.io/news/tether-will-defend-itself-against-shake-down-litigation-commenced-by-celsius/

https://cases.stretto.com/public/x191/11749/PLEADINGS/1174908102480000000001.pdf