Tether, the issuer of the popular stablecoin USDT, is preparing to contest what it describes as a “shake-down” lawsuit filed by the insolvent cryptocurrency lender Celsius. The lawsuit, submitted to the U.S. Bankruptcy Court for the Southern District of New York, demands that Tether either return 57,428.64 Bitcoin (BTC) or compensate Celsius with an equivalent amount, currently valued at around $3.3 billion.
Celsius accuses Tether of “preferential and fraudulent transfers” of Bitcoin during the market downturn in mid-2022, just before Celsius’ bankruptcy filing. The lawsuit claims that Tether demanded and received additional collateral from Celsius to secure its position, alleging that this move was designed to shield Tether from the impending bankruptcy.
Tether disputes these claims, asserting that the Bitcoin was sold at Celsius’ direction and with its consent at the June 2022 price levels. Paolo Ardoino, Tether’s CEO, labeled the lawsuit as baseless and committed to defending against it “vigorously” to set a precedent against what he considers “unprincipled money grabs.”
Additionally, Celsius is seeking $100 million in damages, accusing Tether of undervaluing Celsius’ Bitcoin collateral. Tether counters that it is financially robust, with consolidated equity of approximately $12 billion as of June 30, and assures that Tether token holders will not be impacted by the lawsuit.
Previously, Tether had refuted rumors of a $2 billion loan from Celsius. Ardoino responded to a report by the Celsius examiner, which suggested that USDT had borrowed from Celsius, along with Three Arrows Capital and Alameda Research. The report, authored by former prosecutor Shoba Pillay, indicated that Celsius’ exposure to Tether had exceeded $2 billion and was an “existential threat” to Celsius. Ardoino proposed that this might have been a misinterpretation or typographical error, suggesting that the report might have meant “Celsius loans from Tether” rather than “Celsius loans to Tether.”
Tether confirmed that any loan from Celsius has been fully repaid without loss. The company emphasized that its lending to Celsius was always over-collateralized and had no effect on Tether’s reserves. The decision to liquidate collateral to cover the loan was in accordance with the original agreement, which was confirmed in writing with Celsius before the liquidation process started. While Tether had a minor investment in Celsius, the company asserted that this investment is a small part of its shareholder equity and does not affect USDT reserves.
