Celsius, a company that previously filed for bankruptcy, is now seeking to recover funds by suing Tether for what they claim to be an improper liquidation of more than $800 million worth of BTC. The lawsuit was filed in the US Bankruptcy Court for the Southern District of New York and alleges that Tether breached its contract with Celsius. According to the lawsuit, Tether requested additional collateral from Celsius during a bear market, leading to the liquidation of all the Bitcoin that Celsius had posted as collateral.
Tether was quick to respond to the lawsuit, calling it a “baseless shakedown” and promising to fight back. Tether’s CEO, Paolo Ardoino, explained that Tether provides USDT to customers who overcollateralize in Bitcoin, and if the price of the collateral falls below a certain point, Tether has the right to liquidate the position. Ardoino refuted Celsius’ claims by stating that Celsius had instructed Tether to sell the Bitcoin held as collateral when the price dropped, and Tether had returned the excess to Celsius.
The core issue in the lawsuit is the timeline of events and whether Tether acted within the terms of the agreement with Celsius. Celsius alleges that Tether did not wait for the ten-hour deadline to request additional collateral and instead immediately liquidated all the Bitcoin posted as collateral. This action allegedly put Tether in a more favorable position as a creditor, disadvantaging Celsius.
Tether’s Defense
Tether maintains that they acted in accordance with the terms of the agreement and that Celsius had authorized the liquidation of the collateral. Ardoino emphasized that Tether’s actions were done to protect the company and its customers and that they are confident in the legality of their actions. Tether also dismissed the lawsuit as a “meritless shakedown” that would only benefit the parties involved in bringing the case.
As the legal battle between Celsius and Tether unfolds, the implications for both companies and the wider cryptocurrency industry remain uncertain. Tether’s assertion that the lawsuit is baseless and that they have the equity to withstand any potential repercussions indicates their confidence in the case. On the other hand, Celsius’s pursuit of legal action suggests that they believe they have been wronged and are seeking restitution.
The lawsuit between Celsius and Tether highlights the complexities and risks inherent in the cryptocurrency industry. Legal disputes such as this one can have significant consequences for the parties involved and may set precedents for future cases. As the case progresses, it will be important to closely monitor the developments and outcomes to understand the implications for both companies and the broader crypto market.
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