Tether Limited, the entity responsible for issuing the USDT stablecoin, has rejected a legal action brought by Celsius Network Limited. The case alleges that Tether unlawfully sold off $2.4 billion worth of Bitcoin collateral in June 2022.
Celsius contends that this was inequitable and is seeking the restitution of Bitcoin. Tether claims that the liquidation took place with the guidance and approval of Celsius, by the Bitcoin values observed in June 2022.
In 2022, Tether supplied USDT to Celsius, with Bitcoin (BTC) being used as collateral. Celsius subsequently declared bankruptcy in July 2022 as a result of financial hardships.
In June 2022, when the price of Bitcoin decreased significantly, Celsius encountered a margin call, requiring them to submit further collateral to prevent the liquidation of their Bitcoin holdings by Tether.
Tether alleges that Celsius made the decision to forgo any extra security and instead directed Tether to sell the Bitcoin in order to repay its outstanding debt of $815 million in USDT.
Tether contends that the action erroneously applies the law and disregards the factual details of their initial agreement, asserting that Celsius is attempting to hold Tether responsible for its own inadequate financial management choices. They intend to fiercely protect themselves in the legal proceedings, showing a strong belief that the result will be in their favor.
This case emphasizes the intricacies of financial arrangements in the cryptocurrency sector, particularly in times of market instability, and emphasizes the significance of unambiguous contracts and the legal disputes that may arise when such agreements are disputed.
This issue emerges in the midst of heightened regulatory examination of the crypto sector and has the potential to establish a standard for addressing comparable conflicts in the future, particularly concerning collateral arrangements and liquidation procedures.
In August, Tether announced it made $1.3 billion in Q2 2024 but stopped buying Bitcoin. The company’s financial report showed a net worth of $11.9 billion and $97.6 billion in US Treasury securities.
In Q2 2024, Tether issued $8.3 billion in USDT, with assets higher than debts. CEO Paolo Ardoino stated that the reserve report mainly focused on companies releasing stablecoins. Crypto enthusiasts are curious about Tether’s current reserve amounts.
