On August 9, 2024, Celsius Network Limited, through the Blockchain Recovery Investment Consortium, LLC, filed a $2.4 billion lawsuit against Tether Limited and its affiliates in the United States Bankruptcy Court for the Southern District of New York.

Lawsuit Details

The lawsuit originates from a 2022 agreement where Tether provided USD₮ to Celsius, secured by Bitcoin (BTC) collateral. As BTC's price dropped in June 2022, Celsius was required to provide additional collateral to avoid liquidation. When Celsius failed to do so, they directed Tether to liquidate the BTC collateral, closing out an approximately $815 million position.

Celsius now seeks the return of $2.4 billion worth of BTC, despite the liquidation occurring at their direction and with their consent at June 2022 prices. Tether has dismissed the lawsuit as baseless, emphasizing that the agreement was made long before Celsius' bankruptcy and that the claims attempt to shift the costs of Celsius' mismanagement onto Tether.

Tether's Response

Tether has argued that the lawsuit is undermined by the actual facts of the agreement, misapplies the law, and overlooks numerous defenses. Tether is prepared to contest the claims in court, describing the litigation as a meritless shakedown.

Tether highlighted its strong financial position, noting that its consolidated equity was nearly $12 billion as of June 30, 2024. The company also emphasized its ongoing profitability, asserting that even if the claims were valid, they would not affect Tether token holders.

Market Impact

This legal battle comes at a time when the cryptocurrency market is closely monitoring regulatory and legal developments. Tether's commitment to defending itself could set a precedent for how similar cases are handled in the future.

As the situation unfolds, market participants will be keenly observing the court's decisions and their potential implications for both companies involved and the broader crypto ecosystem.