Tether Calls Celsius Lawsuit a 'Shakedown,' Pledges to Defend in Court

In a recent development, Tether has strongly contested a lawsuit filed by Celsius, labeling it as a mere money grab. The company is adamant that the lawsuit is unjust and has committed to defending itself vigorously in court. This article explores Tether's response and the implications of their stance on the legal battle ahead.

Tether Calls Celsius Lawsuit a 'Shakedown,' Will Fight Back

Tether Limited has strongly opposed a lawsuit from Celsius Network concerning disputed Bitcoin, calling it a "shakedown" and "without merit." The company is committed to a robust defense in court.

The legal action, initiated on August 9 in the U.S. Bankruptcy Court for the Southern District of New York, seeks to recover around $2.4 billion in Bitcoin. Celsius Network claims that Tether wrongfully liquidated these assets prior to Celsius's bankruptcy over two years ago.

In response to the lawsuit, Tether issued a statement on its website, criticizing the suit as a fabricated and unjustified attack. They argue that the only ones who stand to gain from this case are the lawyers, bankers, and consultants involved.

Tether argues that it followed the terms of a 2022 agreement, which required Celsius to add more Bitcoin as collateral when prices fell. Since Celsius did not meet these conditions, Tether claims it was directed by Celsius to sell the Bitcoin to cover an $815 million debt.

Tether criticizes the lawsuit as an attempt to unfairly transfer the cost of Celsius's mismanagement onto them, emphasizing that the liquidation was conducted "at Celsius' direction and with their approval."

The company also disputes the legal grounds of the lawsuit, pointing out what it believes to be an “incorrect application of the law” and raising concerns about jurisdiction. Tether reassures investors about its financial health, reporting $12 billion in consolidated equity as of June 30, 2024.

Celsius, on the other hand, argues that Tether did not adhere to the agreed 10-hour timeframe for making the collateral deposit after the final demand was issued.

The crypto lender, which declared Chapter 11 bankruptcy in July 2022, argues that Tether mishandled 39,542.42 Bitcoin, thereby negating Celsius’s remaining interest in the collateral. The $2.4 billion claim from Celsius is based on the current value of Bitcoin.

Celsius's downfall was a major financial event in 2022, leading to insolvency with liabilities of $5.5 billion exceeding assets by $1.2 billion.

Tether vs Clesius: What Could be the Impact on the Market?

The ongoing legal battle between Tether and Celsius could have significant repercussions for the cryptocurrency market. Tether's assertion that it acted within the terms of its 2022 agreement, and Celsius's claim of mismanagement, highlight broader concerns about market stability and legal accountability in the crypto space. 

If Tether successfully defends itself and disproves Celsius's allegations, it could reinforce confidence in its financial practices and stability, potentially mitigating market fears and stabilizing the value of Tether’s stablecoin. 

Conversely, if Celsius’s claims gain traction, it might spark a broader examination of practices within crypto lending and collateral management, leading to increased regulatory scrutiny and volatility. This could result in a temporary decline in market confidence, impacting the value of Bitcoin and other cryptocurrencies linked to similar lending and collateral arrangements. 

Additionally, the outcome could set a precedent for how similar disputes are handled in the future, influencing both investor behavior and regulatory approaches in the cryptocurrency market.