Key takeaways
- Celsius accused Tether of wrongdoing in connection with a 2022 settlement in which Tether provided USDT to Celsius in exchange for BTC collateral.
- Tether has denied any wrongdoing, saying the lawsuit is baseless and an attempt at “racketeering” to recoup losses due to Celsius’ mismanagement.
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Tether, the issuer of the USDT stablecoin, has fired back at Celsius Network in response to a lawsuit filed against the company on Friday. Tether called the case an attempt to “racketeer” the company to shift blame for Celsius’ financial mismanagement onto Tether.
According to a recent blog post from Tether, in 2022, the company and Celsius signed an agreement in which Celsius borrowed USDT from Tether, using Bitcoin (BTC) as collateral.
When the price of BTC fell, Celsius refused to provide additional collateral as required by the agreement. Tether then liquidated the BTC collateral in accordance with the terms of the agreement when Celsius failed to meet its obligations, the company explained.
Celsius, through its Blockchain Recovery Investment Consortium, is now accusing Tether of wrongful liquidation. Celsius is demanding the return of approximately $2.4 billion worth of BTC from Tether, but the stablecoin issuer claims the lawsuit is baseless, vowing to defend itself.
“Tether will never fall prey to shameless lawsuits. We will vigorously defend ourselves against the unwarranted allegations brought against us and we expect to prevail in this litigation,” Tether said.
In an article published on X, Tether CEO Paolo Ardoino claimed that Tether acted in accordance with the contract and that the lawsuit ignores basic concepts of risk management, market slippage, and liquidation processes.
He said that even if the lawsuit were to move forward, 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, our top priority and duty is undoubtedly the Tether Group, which has nearly $12 billion in equity. Even in the most unlikely scenario where this baseless lawsuit would succeed, USDT token holders would not be affected,” Ardoino noted.
Celsius Network, formerly a leading cryptocurrency lender, emerged from bankruptcy earlier this year after completing transactions as part of its confirmed restructuring plan, including distribute more than $3 billion in crypto and cash to creditors.
Celsius creditors also received shares of Ionic Digital, a Bitcoin mining company founded in February, as part of the bankruptcy exit. Ionic has mined over 1,300 BTC since its founding and currently holds over 1,800 BTC, the company said in a recent press release.
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