Celsius Network Sues Tether Over $4.3 Billion Liquidation

The lawsuit underscores potential risks in crypto markets and highlights vulnerabilities in contractual agreements.

Celsius Network, a crypto lending firm, has been permitted by the U.S. Bankruptcy Court to pursue legal action against Tether for liquidating nearly 40,000 BTC. The case stems from the alleged violation of a contractually required 10-hour notice before liquidation. This significant lawsuit involves Celsius, which filed for bankruptcy in 2022, and Tether Limited, the issuer of the widespread USDT stablecoin. A justice’s recent ruling allows Celsius to assert claims of breach of contract.

Martin Glenn, Chief Bankruptcy Judge, U.S. Bankruptcy Court, – “Alleged oral permission by then-CEO Alexander Mashinsky to liquidate collateral was insufficient, and contractually stipulated procedures (the 10-hour window) may have been bypassed — which warrants trial on these claims.”

The implications of the case are widespread, potentially affecting Bitcoin and related markets. The liquidation of assets has drawn attention to contractual practices in the crypto industry. This litigation mirrors past incidents such as Mt. Gox, raising questions about the stability of crypto lending platforms and custodial practices. Bitcoin and USDT, among others, face scrutiny from potential regulatory and market participants. The courtroom’s allowance for Celsius’s claim sets a precedent for cross-border crypto legal disputes, emphasizing the role of U.S. courts in such matters. Potential impacts on financial, regulatory, and technological landscapes underscore market volatility and highlight the need for transparent and reliable agreements in cryptocurrency transactions.