A U.S. bankruptcy judge in the Southern District of New York has allowed bankrupt crypto lender Celsius Network to proceed with a multibillion‑dollar lawsuit against Tether, the issuer of the USDT stablecoin, over the liquidation of Celsius’ bitcoin collateral during the firm’s 2022 collapse. Celsius’ estate administrators are seeking roughly $4–4.3 billion in damages, arguing that Tether wrongfully liquidated about 39,000–39,500 BTC that had been pledged as collateral for an approximately $812 million loan. Judge Martin Glenn largely rejected Tether’s motion to dismiss, finding Celsius had stated “plausible” domestic claims for breach of contract and fraudulent or preferential transfers under U.S. bankruptcy law, though he did dismiss one count tied to a British Virgin Islands law good‑faith covenant. The dispute centers on whether Tether complied with the terms of its lending agreement when it made a margin call and then liquidated Celsius’ bitcoin during a sharp market downturn in June 2022. Celsius alleges Tether ignored a contractual 10‑hour waiting period before liquidation and applied the BTC at an average price of about $20,656, allegedly below prevailing market rates, then transferred the assets to Bitfinex accounts as partial repayment of Celsius’ debt. By allowing the core claims to advance, the ruling keeps open the possibility that billions of dollars could be clawed back for Celsius creditors and underscores growing legal scrutiny of major crypto intermediaries’ collateral, liquidation, and jurisdictional practices in U.S. courts.

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