A U.S. bankruptcy judge has given Celsius the green light to move forward with its $4 billion lawsuit against Tether. The crypto lender, which collapsed during the 2022 market crash, accuses the stablecoin issuer of breaching contract terms when it sold off tens of thousands of Bitcoin.
In 2022, Tether liquidated 39,500 BTC that Celsius had posted as collateral. The move helped recover an $812 million debt. However, Celsius claims Tether broke the deal by skipping a mandatory 10-hour wait period before selling the assets. The lender says this rushed liquidation caused significant damage.
Tether denies Celsius Bitcoin allegations
Celsius filed the case in August 2024. Tether denied any wrongdoing and called the lawsuit a desperate attempt to recover funds. At the heart of the case is whether Tether followed agreed rules when the value of Bitcoin plunged. Celsius believes the company acted too fast and without proper clearance.
The ruling does not fully support Celsius. The judge threw out a few of the claims tied to international laws. These parts involved Tether’s overseas operations, including a unit based in the British Virgin Islands. Still, the main issue, whether Tether sold the Bitcoin improperly, will go to court.
The lender’s past adds weight to the case. At its peak, Celsius held over $25 billion in assets. When it collapsed, it left a wide trail of losses for everyday investors. Its former CEO now faces a 12-year prison term for fraud. He also lost the right to benefit from the company’s assets.
Celsius Lawsuit may reshape crypto
Despite the ongoing legal fight, Celsius has returned a large portion of funds to its former users. Since early 2024, the company has paid out $2.5 billion to more than 250,000 creditors. This covered 93% of total claims. A smaller group still awaits payments due to missing or incomplete claims.
Legal experts say the case could set an important precedent. U.S. courts may be willing to hear disputes involving offshore crypto firms if the financial actions reach into American systems. That warning now hangs over many firms that use cross-border structures to manage risk.
Tether has not yet issued a fresh response to the court’s latest decision. As the case progresses, the crypto world will watch closely. The outcome may shape future lender-borrower relationships in the growing but unstable digital asset space.
