Key Takeaways
- Celsius accused Tether of wrongdoing in a 2022 agreement where Tether provided USDT to Celsius against BTC collateral.
- Tether denied wrongdoing, claimed the lawsuit is baseless and a “shakedown” attempt to recover losses from Celsius’ mismanagement.
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Tether, the issuer of the stablecoin USDT, has fired back at Celsius Network in response to a lawsuit filed against the company on Friday. Tether called the case a “shakedown” attempt to shift blame for Celsius’s financial mismanagement onto Tether.
According to a recent blog post from Tether, in 2022, the company and Celsius inked an agreement where Celsius borrowed USDT from Tether, using Bitcoin (BTC) as collateral.
When the price of BTC dropped, Celsius refused to provide additional collateral as required by the agreement. Tether then liquidated the BTC collateral as per the agreement terms when Celsius failed to meet its obligations, the firm explained.
Celsius, through its Blockchain Recovery Investment Consortium, is now accusing Tether of improper liquidation. Celsius demands approximately $2.4 billion in BTC restitution from Tether, but the stablecoin issuer claims the lawsuit is baseless, vowing to defend itself.
“Tether will never fall prey to shameless litigation money grabs. We will vigorously defend ourselves against the unwarranted allegations made against us, and we expect to prevail in this litigation,” Tether stated.
In a post on X, Tether CEO Paolo Ardoino argued that Tether acted according to the contract and that the lawsuit misunderstands basic concepts of risk management, market slippage, and liquidation processes.
He said that even if the lawsuit were to progress, Tether’s strong financial position, with nearly $12 billion in equity, ensured that USDT holders would not be affected.
“When it comes to the safety of USDT users, without doubt our main priority and duty, Tether group has equity of nearly $12 billion. Even in the most remote scenario in which this baseless lawsuit will get somewhere, USDT token holders will not be impacted,” Ardoino noted.
Celsius Network, formerly one of the leading crypto lenders, emerged from bankruptcy earlier this year after completing transactions under its confirmed restructuring plan, including distributing over $3 billion in crypto and cash to creditors.
Celsius creditors also received shares in Ionic Digital, a Bitcoin mining company established in February, as part of the bankruptcy exit. Ionic has mined over 1,300 BTC since its establishment and currently holds over 1,800 BTC, said the firm in a recent press release.
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