Celsius Wins Key Round in $4 Billion Lawsuit Against Tether

Celsius Network just got the green light to take Tether to court over one of the biggest disputes in recent crypto history – a $4 billion lawsuit centered around the liquidation of Bitcoin during Celsius’s collapse in 2022.

A U.S. bankruptcy judge has allowed the case to move forward, rejecting major parts of Tether’s attempt to shut it down. The ruling could have lasting consequences for how global crypto firms are held accountable in U.S. courts, especially when billions are on the line.

Here are the deets.

Tether’s “Fire Sale” of Bitcoin Under Scrutiny

The case goes back to June 2022, when Celsius was already under pressure as crypto markets crashed. Tether, which had lent money to Celsius, allegedly sold over 39,500 BTC at an average price of $20,656, well below market value at the time. Celsius says this was done without proper notice AND in violation of a 10-hour waiting period that was part of their agreement.

Celsius claims this move not only broke their contract, but also amounted to fraudulent and preferential transfers under U.S. bankruptcy law. At today’s prices, Celsius says the early liquidation cost them over $4 billion worth of Bitcoin.

The BTC, according to court documents, was later moved to Bitfinex, Tether’s sister company.

Tether’s Jurisdiction Argument Fails

Tether tried to get the case dismissed, arguing that a U.S. court has no authority since the company is based in the British Virgin Islands and Hong Kong. But the judge disagreed.

The court found that Tether used U.S.-based personnel, bank accounts, and communications in its dealings with Celsius enough to consider the activity “domestic.” That ruling now opens the door for Celsius’s lawsuit to proceed in the U.S., even though Tether operates offshore.

Some lesser claims were dismissed, but the judge is allowing Celsius to pursue key charges – including breach of contract, fraudulent transfer, and preferential transfer.

Big Implications for Crypto Lending and Stablecoins

This isn’t just a courtroom fight between two crypto companies. The ruling could influence how similar cases are handled in the future especially when it comes to stablecoin issuers, asset custody, and cross-border lending practices.

If Celsius proves its claims, it could raise serious questions about how major players like Tether manage client assets during times of market stress.

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Tether Keeps Expanding Despite Legal Pressure

While the legal battle continues, Tether isn’t slowing down. The company recently bought a majority stake in Twenty One Capital, a firm linked to Strike CEO Jack Mallers. With that move, Tether is now connected to the third-largest corporate Bitcoin holder in the world.

Tether also transferred nearly 37,230 BTC, worth about $3.9 billion, to addresses tied to the platform further strengthening its position in the Bitcoin market.

In the middle of all this, CEO Paolo Ardoino has dismissed talk of a Tether IPO. Even as speculation swirls over a possible $500 billion valuation, Ardoino said the company has “no plans” to go public.

What’s Next?

The case now heads to the next phase, with Celsius aiming to hold Tether accountable for what it sees as a massive breach of trust. 

We’ll keep you updated on how this plays out – right here on Coinpedia. 

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