Celsius is suing Tether over dispute on bitcoin collateral liquidation, calls for $3.5 billion
Celsius Community, a bankrupt cryptocurrency lender, is demanding $3.5 billion in damages and returns from Tether, alleging improper liquidation of Bitcoin collateral.
Tether labeled the lawsuit a “shake down,” saying that the claims originate from a professional settlement made earlier than Celsius’s chapter.
“This baseless lawsuit in opposition to Tether proves the adage that ‘no good deed goes unpunished’,” Tether wrote in a weblog put up.
Tether mentioned that Celsius had the accountability to put up extra collateral as BTC costs fell.
“When Celsius chose not to post additional BTC it directed Tether to liquidate the BTC collateral Tether held in order to close out its roughly 815 million USDT position with Tether,” Tether’s weblog put up learn. “…this lawsuit seeks to improperly impose the costs of Celsius’ mismanagement and failure on Tether.”
The lawsuit, filed on August 9 in the United States Bankruptcy Court for the Southern District of New York, stems from a 2022 agreement where Tether provided USDT, a stablecoin, to Celsius in exchange for Bitcoin (BTC) as collateral.
As BTC prices fell to as low as $24,000 in June 2022, the agreement required Celsius to post additional collateral.
Celsius’ Claims
According to the lawsuit filing, Celsius had notified Tether that it was “working on preparing the BTC [Bitcoin]” to meet the collateral demand and reminded Tether that it had ten hours to do so under the agreement. Despite this, Tether’s representatives demanded immediate payment, igniting a “fire sale” of Celsius’s collateral.
“However, Tether’s representatives demanded immediate payment notwithstanding expressly acknowledging that Celsius ‘have 10h in the [Agreement]…” the submitting states.
The submitting states that Tether offered Celsius’s Bitcoin in tranches over a couple of hours, making use of a complete of 39,542.42 BTC in opposition to Celsius’s excellent money owed.
Within the 90 days main as much as its chapter, Celsius had transferred this quantity to Tether as collateral. Celsius outlines three forms of transfers inside its whole demand — 15,658.21 BTC in numerous “top-up transfers” to take care of collateral ranges, 10,700 BTC as new mortgage collateral together with 2,228.01 BTC of extra, and the ultimate liquidation of 39,542.42 BTC on June 13, 2022.
Celsius is searching for the return of roughly 57,428.64 BTC, valued at roughly $3.48 billion, which incorporates “top up transfers” and the ultimate liquidation. Celsius claims $100 million in damages for breach of contract.
In the meantime, there’s a notable discrepancy within the valuation of those Bitcoin transfers. Whereas Celsius calls for the return or equal worth of 57,428.64 BTC, Tether’s weblog put up mentions $2.4 billion in BTC.
Celsius was a lending platform that paused withdrawals and filed for chapter in June 2022 amid market turmoil following the collapse of Terra and Luna.
