Celsius Sues Tether for $3.5 Billion Over Bitcoin Collateral Sale
Date: 2024-08-12 Author: Gabriel Deangelo Categories: BUSINESS
Bankrupt cryptocurrency platform Celsius has filed a lawsuit against Tether, alleging that it wrongfully sold off bitcoin collateral and is seeking $3.5 billion in damages, including the value of the bitcoin, damages, and legal fees.
According to Tether, Celsius is seeking about $2.4 billion in bitcoin. However, publicly available court documents show that Celsius is seeking 57,428.64 BTC or its equivalent in U.S. dollars at the current exchange rate, as well as additional damages and legal fees.
Celsius' Claims
Celsius' lawsuit alleges that during its bankruptcy proceedings, Tether loaned it USDT stablecoins backed by U.S. dollars. Celsius pledged 39,542.42 BTC to Tether as collateral.
When the price of Bitcoin began to fall, Celsius was required by the parties to provide additional collateral to avoid liquidation. However, as the lawsuit alleges, Tether liquidated the collateral at a price that almost completely covered the debt, without giving Celsius the opportunity to further secure the position.
Tether's Response
Tether has vehemently denied the allegations, calling the lawsuit baseless and accusing Celsius of trying to "extort" funds. In a recent blog post, the company said it will "vigorously defend" itself against the "unfounded allegations." According to Tether, the liquidation of the Bitcoin was done at the behest of Celsius itself, which decided not to provide additional collateral and ordered the sale of BTC to cover a debt of about 815 million USDT.
In addition, Tether assured USDT holders that their interests will not be harmed even if the lawsuit against the company is somehow successful. The company emphasized that it has $12 billion in consolidated capital, which guarantees the stability of the token in any outcome.
Amount of damages
As mentioned, the exact amount that Celsius is demanding is questionable. The crypto community is discussing the figure of 39,542.42 BTC, which as of August 10 is valued at about $2.4 billion.
However, the lawsuit also states that Celsius is demanding the reversal of two more transactions made during the same period. In the motion to litigate, Celsius asks the court to order the defendants to return 15,658.21 BTC, 2,228.01 BTC, and 39,542.42 BTC, or their equivalent in U.S. dollars.
These three transactions total 57,428.64 BTC, which is worth approximately $3.48 billion as of August 10 at a price of $60.627 per bitcoin.
In addition, Celsius is seeking at least $100 million in compensatory damages, as well as additional damages to be determined during the trial, and legal fees.
