Celsius sues Tether seeking $3.5B over Bitcoin collateral selloff

Defunct cryptocurrency exchange Celsius has filed a lawsuit against Tether alleging misappropriation of assets and seeking approximately $3.5 billion in BTC returns, damages, and legal fees. 

Up front: Tether reports that Celsius, in its lawsuit, seeks the return of approximately $2.4 billion worth of BTC. However, publicly available court documents show that Celsius has asked the court for relief in the amount of 57,428.64 BTC or its current market dollar equivalent, plus damages and legal fees.

Celsius sues Tether

The lawsuit alleges that, during Celsius’ bankruptcy proceedings, Tether loaned it a specific amount of USDT (the company’s stablecoin, a cryptocurrency backed by the US dollar). In return for this loan, Celsius sent Tether 39,542.42 BTC in collateral.

As the price of Bitcoin dropped, and per the two parties’ agreement, Celsius was required to provide further collateral to avoid liquidation.

According to the lawsuit, Celsius claims Tether liquidated the BTC at a price point that almost exactly covered the debt without giving it the opportunity to provide additional collateral.

Tether responds

According to Tether, the lawsuit is baseless. The company called the proceedings a “shake down” and pledged to “vigorously defend” itself against “unwarranted allegations” in a recent blog post.

Tether says that, rather than liquidating Celsius’ position in violation of their contract, it was Celsuis that requested the selloff after choosing not to provide additional collateral:

“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 USD₮ position with Tether.”

While Tether has left no doubt about its commitment to fighting the suit, it’s also been quick to reassure USDT stakeholders. Citing its $12 billion in consolidated equity, the company stated that “even in the most remote scenario in which this baseless lawsuit will get somewhere, Tether token holders will not be impacted.”

Damages

As mentioned above, the exact amount Celsius seeks appears to be in question. The number currently being reported throughout the crypto community, and cited in Tether’s blog post, accounts for 39,542.42 BTC, worth about $2.4 billion as of Aug. 10.

However, according to page 28 of the legal filing, the plaintiffs also want two other transfers made during the same period voided.

As part of the suit’s “prayer for relief,” the plaintiffs ask the court to “require Defendants to relinquish to Plaintiffs the 15,658.21 Bitcoin, 2,228.01 Bitcoin, and 39,542.42 Bitcoin preferentially transferred by Plaintiffs to Defendants” or its current dollar value.

Together, those three transfers amount to 57,428.64 Bitcoin. As of Aug. 10, at a price of $60,627 per BTC, Celsius is apparently seeking approximately $3.48 billion in Bitcoin.

Furthermore, the Celsius suit also seeks no less than $100 million in damages “plus additional damages to be determined at trial” and legal fees.