On August 9, 2024, Celsius Network Limited, acting through the Blockchain Recovery Investment Consortium, LLC, filed suit against Tether Limited, and certain of its affiliates, in the United States Bankruptcy Court for the Southern District of New York.
This “baseless” lawsuit against Tether proves the adage that “no good deed goes unpunished.”
The claims arise out of “a 2022 agreement under which Tether made USD₮ available to Celsius, in amounts that Celsius requested at the time. Under the agreement, Celsius posted bitcoin (BTC) to Tether as collateral.”
As the price of BTC began to fall in June 2022, “the agreement required Celsius to post additional collateral to avoid the liquidation of its BTC.”
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.”
Rather than recognize the clear validity of the agreement entered into years before Celsius’ bankruptcy, this lawsuit “seeks to improperly impose the costs of Celsius’ mismanagement and failure on Tether.”
Over two years following its arm-length agreement with Tether—and armed with the benefit of hindsight—this lawsuit “incredibly now seeks the return of approximately US$2.4 billion worth of BTC from Tether, despite the BTC being liquidated at Celsius’ direction and with Celsius’ consent at June 2022 prices.”
The complaint is undermined “by the actual facts underlying the agreement between Celsius and Tether, relies on an obvious misapplication of the law, ignores the numerous defenses that Tether has to the claims asserted against it and raises substantial jurisdictional questions.”
Tether look forward to responding in court “to this contrived, meritless shakedown that will benefit nobody other than the lawyers, bankers and consultants involved in bringing this case.”
As they’ve reportedly said many times, Tether will “never fall prey to shameless litigation money grabs.”
They aim to “vigorously defend ourselves against the unwarranted allegations made against us, and we expect to prevail in this litigation.”
Finally they note that “because of Tether’s prudent management, as recently announced, the consolidated equity of the Tether group was nearly US$12 billion on June 30, 2024.”
In addition to their current consolidated equity, Tether operates a “profitable business with further profits accruing monthly.”
As a result, even in the most remote scenario “in which this baseless lawsuit will get somewhere, Tether token holders will not be impacted.”