Tether Fights Back: Calls Celsius’ Billion-Dollar Lawsuit Over Bitcoin Liquidation ‘Baseless’

Tether, the creator of USDT stablecoins, is finally defending itself against Celsius’ complaint where it sued the former last week for billions in damages. Celsius had accused Tether of unlawfully liquidating and breaching a token agreement which was signed by both Celsius and Tether.

Tether, however, called the lawsuit “baseless”, adding that “no good deed goes unpunished.” On the other hand, Celsius has accused Tether of exploiting Celsius’ financial troubles and using it for its own gain, while Celsius was approaching bankruptcy.

Background

Back in 2020, Celsius relied on stablecoins in order to support its operations and borrowed around $2 billion from Tether. The former had pledged tens of thousands of Bitcoin as collateral.

In 2022, the crypto market began seeing a downsurge, with Tether demanding extra collateral, against which Celsius had taken an extra $300 million in debt, providing more Bitcoin as collateral.

In June that year, Tether demanded additional collateral, giving Celsius a deadline to comply within 10 hours. The former refused to wait and utilized all posted collateral which was around 39,542.42 Bitcoin at that time. Celsius claimed it was repaid for less than reasonably equivalent value.

Industry Reaction

What could it mean for the crypto space if Celsius wins the lawsuit? Speaking exclusively to The Shib Daily, Ryan Lee, Chief Analyst at Bitget Research, shared that if Celsius ultimately wins the lawsuit, Tether might be required to return a significant amount of Bitcoin, which could impact Tether’s liquidity and market position.

This could also trigger concerns about Tether’s stability in the market. However, even if the lawsuit is successful, it would not affect the Tether token holder, according to Lee. “Tether’s net operating profit for Q2 reached $1.3 billion, and its profit for the first half of 2024 was as high as $5.2 billion. The USDT business is crucial for Tether, making it unlikely that the lawsuit will affect Tether’s stability and damage the company’s future earnings,” he added.

But what if Tether is correct?

Lee noted that the agreement required Celsius to provide additional collateral to prevent the liquidation of its Bitcoin when Bitcoin prices started to fall in June 2022. This means if Celsius chose not to provide additional Bitcoin and instructed Tether to liquidate the Bitcoin collateral it held, Tether still has a strong chance of winning the case.

Tether is also positive and hopeful, anticipating victory in the lawsuit. According to the stablecoin issuer, “As we’ve said many times, Tether will never fall prey to shameless litigation money grabs. We will vigorously defend ourselves against the unwarranted allegations made against us, and we expect to prevail in this litigation.”

Gairika holds positions in BTC. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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