Key Points
- Celsius has accused Tether of illegal activity by providing USDT to Celsius in exchange for BTC collateral in a 2022 contract.
- Tether denies wrongdoing and says the lawsuit is baseless and an attempt at “intimidation” to recover losses caused by Celsius’s mismanagement.
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Tether, the issuer of the stablecoin USDT, hit back at Celsius Network on Friday in response to a lawsuit filed against the company, which Tether called an “intimidation” attempt to shift blame for Celsius’ financial mismanagement onto Tether.
According to a recent blog post from Tether, in 2022, Tether and Celsius entered into an agreement whereby Celsius would borrow USDT from Tether using Bitcoin (BTC) as collateral.
When the price of BTC fell, Celsius refused to provide additional collateral as required by the contract. Then, when Celsius defaulted on its obligations, Tether liquidated the BTC collateral as per the terms of the contract, the company explained.
Celsius is accusing Tether of improper liquidation through the Blockchain Recovery Investment Consortium. Celsius is seeking approximately $2.4 billion in BTC compensation from Tether, but the stablecoin issuer has vowed to defend itself, arguing that the lawsuit is baseless.
“Tether will never be the victim of a blatant embezzlement of litigation funds. We will vigorously defend ourselves against the unfair claims against us and expect to prevail in this lawsuit,” Tether said.
In a post on X, Tether CEO Paolo Ardoino argued that Tether acted in accordance with its contract and that the lawsuit misunderstands basic concepts of risk management, market declines, and liquidation procedures.
He said that even if the lawsuit proceeds, it will not affect USDT holders due to Tether’s strong financial position (its assets are worth about $12 billion).
“When it comes to the safety of USDT users, it is without a doubt our primary priority and obligation, the Tether Group has nearly $12 billion in capitalization. Even in the farthest-off scenario where this baseless lawsuit reaches anywhere, USDT token holders will not be affected,” Ardoino said.
Celsius Network, previously one of the leading cryptocurrency lenders, emerged from bankruptcy earlier this year after completing a transaction under a confirmed restructuring. Plan, Include Distributes over $3 billion in cryptocurrency and cash to creditors.
Celsius creditors also received shares in Ionic Digital, a Bitcoin mining company founded in February as part of the bankruptcy exit. Ionic has mined more than 1,300 BTC since its founding and currently holds more than 1,800 BTC, the company said in a recent press release.
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