Tether Limited, the issuer of the largest stablecoin USDT, has strongly denied a lawsuit filed by Celsius Network Limited. In a press release on Saturday, Tether accused the bankrupt crypto lending company of attempting to shift the blame for its financial woes, calling the lawsuit “baseless” and an example of “meritless extortion.”
The lawsuit, filed on Aug. 9 in the U.S. Bankruptcy Court for the Southern District of New York, is over a dispute over the 2022 agreement. The lawsuit alleges that Tether improperly liquidated approximately $2.4 billion worth of BTC collateral in June 2022.
Celsius claims the liquidation was unjustified and is now seeking the return of the liquidated BTC, but Tether maintains that the liquidation was “conducted at the direction of and with the consent of Celsius, at the June 2022 price.”
Background to the conflict
In 2022, as part of the agreement, Tether provided USDT to Celsius, which filed for bankruptcy in July 2022. In return, Celsius provided Bitcoin (BTC) as collateral. When the price of Bitcoin began to spike in June 2022, Celsius faced a margin call. As per the agreement, Celsius was required to post additional collateral to avoid liquidation of Tether's BTC holdings.
According to Tether, Celsius “chose” not to post additional collateral, but rather “instructed” Tether to liquidate its BTC collateral and liquidate Tether’s approximately 815 million USDT position.
Tether's response
Tether described the lawsuit as a “clear misapplication of law” and argued that it ignores the “actual facts” underlying the original agreement. Tether also argued that the lawsuit is intended to shift the burden of Celsius's collapse to Tether by retroactively imposing costs on Tether for decisions made by Celsius during a time of financial difficulty.
As the press release states:
“This lawsuit seeks to unfairly push the costs of Celsius' mismanagement and failure onto Tether, rather than acknowledging the clear validity of agreements made years before Celsius' bankruptcy.”
Tether further vowed to “vigorously defend” itself in court and hopes that the outcome will be in its favor. The press release added:
“Tether will never fall prey to shameless litigation schemes.”
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