Celsius Wins Key Ruling in $4 Billion Bitcoin Lawsuit Against Tether

Celsius Network has secured a significant legal victory in its ongoing lawsuit against Tether. A US bankruptcy judge has ruled that the multibillion-dollar lawsuit can proceed, rejecting key parts of Tether’s motion to dismiss the case. The lawsuit, filed in New York, alleges that Tether improperly liquidated over 39,500 Bitcoin belonging to Celsius during the crypto lender’s collapse in June 2022. Celsius claims that Tether acted in bad faith by executing a “fire sale” of the collateral at an average price of $20,656—below market value—and applied the proceeds to an $812 million loan without observing a mandatory 10-hour waiting period. The funds were reportedly later moved to Tether’s affiliated Bitfinex accounts.

Celsius alleges that Tether’s actions breached their lending agreement, violated good faith obligations under British Virgin Islands law, and constituted fraudulent and preferential transfers under US bankruptcy regulations. These allegations are based on the premise that, despite Tether being incorporated in the British Virgin Islands and Hong Kong, the actions in question involved US-based elements, including personnel, communications, and financial accounts. The judge agreed that the case had enough domestic ties, countering Tether’s claim that the lawsuit represented an overreach of US jurisdiction.

Although some claims were dismissed, the court allowed Celsius to move forward with its core allegations of breach of contract and improper transfer of assets. The company argues that the premature liquidation cost it over $4 billion at current Bitcoin prices. Celsius was once a major player in crypto lending, and exited bankruptcy in January of 2024 after 18 months of restructuring. It has since started repaying creditors.

This legal victory for Celsius is a significant development in the ongoing dispute between the two companies. The outcome of this lawsuit could have far-reaching implications for the crypto industry, as it involves allegations of bad faith and fraudulent transfers. The case highlights the complexities and risks associated with crypto lending and the importance of adhering to contractual terms and regulatory requirements. As the lawsuit moves forward, both Celsius and Tether will need to present their arguments and evidence to support their respective positions. The final outcome of the case remains to be seen, but it is clear that the legal battle between these two companies is far from over.