Tether Limited, the issuer of the world’s largest stablecoin USDT, has vehemently denied claims made by the bankrupt crypto lender Celsius Network, labeling a recently filed lawsuit as “baseless” and a blatant attempt to deflect blame for its own financial collapse.
At the heart of the dispute is a $2.4 billion worth of Bitcoin (BTC) collateral that Tether liquidated in June 2022. Celsius is now seeking to reclaim these funds, alleging that the liquidation was unlawful. However, Tether insists that the action was taken with Celsius’ full consent and at its direction due to a margin call triggered by the plummeting Bitcoin price.
According to Tether, a 2022 agreement between the two companies stipulated that Celsius would provide BTC as collateral for USDT loans. When Bitcoin’s value tanked, Celsius faced a margin call, necessitating the provision of additional collateral to prevent liquidation. Instead of complying, Tether claims Celsius opted to liquidate the BTC collateral to settle its USDT debt.
In a strongly worded press release, Tether accused Celsius of attempting to “shift the burden of its mismanagement and failure onto Tether.” The company vowed to vigorously defend itself against the lawsuit, characterizing it as a “shameless litigation money grab.”
Legal experts believe the case could have far-reaching implications for the cryptocurrency industry, as it delves into the complexities of collateralization, margin calls, and the legal framework governing stablecoin issuers and lending platforms. The outcome of the lawsuit could set a precedent for future disputes and potentially shape regulatory oversight in the space.
As the legal battle unfolds, market participants will be closely watching the developments, as the case could introduce significant volatility into the cryptocurrency market.
