Celsius Wins Legal Battle Against Tether Over $4 Billion Bitcoin Dispute

Celsius Network has secured a significant victory in its legal battle against Tether, as a U.S. bankruptcy judge has allowed a $4 billion lawsuit to proceed. The lawsuit centers around the liquidation of Bitcoin during Celsius’s collapse in 2022, marking one of the largest disputes in recent crypto history.

The case dates back to June 2022, when Celsius was already under significant pressure due to the crashing crypto markets. Tether, which had lent money to Celsius, allegedly sold over 39,500 BTC at an average price of $20,656, a price well below the market value at the time. Celsius argues that this sale was conducted without proper notice and in violation of a 10-hour waiting period stipulated in their agreement. According to Celsius, this move not only breached their contract but also constituted fraudulent and preferential transfers under U.S. bankruptcy law, resulting in a loss of over $4 billion worth of Bitcoin at current prices. The BTC was subsequently moved to Bitfinex, Tether’s sister company.

Tether attempted to dismiss the case by arguing that a U.S. court lacks jurisdiction since the company is based in the British Virgin Islands and Hong Kong. However, the judge ruled that Tether’s use of U.S.-based personnel, bank accounts, and communications in its dealings with Celsius was sufficient to consider the activity “domestic.” This ruling allows Celsius’s lawsuit to proceed in the U.S., despite Tether’s offshore operations. While some lesser claims were dismissed, the judge permitted Celsius to pursue key charges, including breach of contract, fraudulent transfer, and preferential transfer.

The implications of this ruling extend beyond the courtroom, potentially influencing how similar cases are handled in the future, particularly regarding stablecoin issuers, asset custody, and cross-border lending practices. If Celsius successfully proves its claims, it could raise serious questions about how major players like Tether manage client assets during times of market stress.

Despite the ongoing legal battle, Tether continues to expand its operations. The company recently acquired a majority stake in Twenty One Capital, a firm linked to Strike CEO Jack Mallers, further strengthening its position in the Bitcoin market. Additionally, Tether transferred nearly 37,230 BTC, worth about $3.9 billion, to addresses tied to the platform. CEO Paolo Ardoino has dismissed speculation about a Tether IPO, stating that the company has “no plans” to go public, even as rumors of a potential $500 billion valuation circulate.

The case is now moving to the next phase, with Celsius aiming to hold Tether accountable for what it sees as a significant breach of trust. The outcome of this legal battle could have far-reaching consequences for the crypto industry, setting precedents for how global crypto firms are held accountable in U.S. courts, especially when substantial sums are involved.