Tether Challenges Celsius’ $2B Bitcoin Fraud Lawsuit, Defends Liquidation During Market Crash

• Tether disputes Celsius’ $2B fraud claim, defending BTC liquidation as standard risk management during market downturn.
• Celsius’ lawsuit against Tether hinges on “fraudulent” BTC transfers, which Tether rebuts as necessary actions to protect interests.
• Tether’s legal challenge against Celsius highlights the stablecoin issuer’s ongoing battle against complex crypto litigation.

Stablecoin issuer Tether has strongly denied allegations of fraudulent activity leveled against it by Celsius Network, a bankrupt crypto lender. The legal confrontation stems from a lawsuit filed by Celsius, which accuses Tether of contributing to its financial collapse through improper transfers of Bitcoin (BTC). The lawsuit seeks to recover over $2 billion worth of BTC, which Celsius claims were lost due to Tether’s actions during a critical period leading up to its bankruptcy.

Celsius’ Allegations and Tether’s Defense

Celsius Network’s lawsuit alleges that Tether engaged in “fraudulent” and “preferential” transfers of BTC. The bankrupt lender claims these actions played a significant role in its downfall. However, Tether’s CEO, Paolo Ardoino, has offered a detailed rebuttal, emphasizing that the stablecoin issuer’s actions were in line with standard risk management practices.

Ardoino explained that Tether provided USDT to certain customers, including Celsius, under an arrangement that required overcollateralization in BTC. This meant that customers, such as Celsius, had to provide Bitcoin as collateral, which Tether could liquidate if the BTC’s value dropped below a specific threshold. Ardoino emphasized that the sale of Celsius’ collateralized Bitcoin was a legitimate action taken to protect Tether’s interests when BTC prices plummeted in 2022.

Tether’s Response to the Bitcoin Liquidation Claims

The legal dispute centers around Tether’s decision to sell the BTC held as collateral for Celsius during the significant market downturn. Celsius requested the sale, and Tether complied, returning the excess funds after covering the lender’s position.

Ardoino described the fraud claims as baseless, asserting that the Bitcoin liquidation was a necessary measure to enforce risk management protocols, not a fraudulent act.

Furthermore, Tether expressed its intent to challenge the lawsuit in court, viewing the litigation as an attempt to extract unwarranted funds from the stablecoin issuer. The firm is determined to defend its actions and set a precedent for similar cases in the crypto market.

Tether’s Legal Challenges and Broader Implications

This lawsuit is not the first legal challenge Tether has faced. The company has a history of navigating complex legal waters, including an amended class action lawsuit in July that accused Tether and its sister company, Bitfinex, of inflating crypto commodity prices. Tether has consistently denied these allegations and remains committed to defending its practices.