Tether Limited has hit back against a lawsuit from Celsius Network over disputed Bitcoin, labeling it a "shakedown" and "baseless" while vowing to defend itself vigorously in court.
Filed on August 9 in the U.S. Bankruptcy Court for the Southern District of New York, the suit seeks to claw back some $2.4 billion in Bitcoin that former crypto lender Celsius claims was improperly liquidated by Tether before its bankruptcy over two years ago.
“No good deed goes unpunished,” Tether wrote in a response to the suit, published on its website Friday. "We 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."
Tether insists it acted within the terms of a 2022 agreement that required Celsius to post additional Bitcoin as collateral when prices fell. When Celsius didn't meet these requirements, Tether says it was instructed by Celsius to liquidate the Bitcoin to cover an $815 million debt.
“This lawsuit seeks to improperly impose the costs of Celsius’ mismanagement on Tether,” the stablecoin issuer wrote, emphasizing that the liquidation was done “at Celsius’ direction and with Celsius’ consent.”
Tether also questioned the lawsuit’s legal foundation, pointing to what it called an “obvious misapplication of the law” and raising concerns over jurisdiction. The company assured investors that it remains financially strong, with $12 billion in consolidated equity as of June 30, 2024.
“We 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,” it said.
For its part, Celsius claims that upon receiving the final demand for collateral, Tether did not provide the contractually agreed-on 10-hour timeframe to make the deposit.
The crypto lender, which filed for Chapter 11 bankruptcy in July 2022, argues that “Tether forged ahead with an improper application of 39,542.42 Bitcoin,” destroying Celsius’s residual interest in the collateral. Celsius’ claim of $2.4 billion stems from the current value of Bitcoin's price.
Celsius’ collapse was one of 2022's major financial events, leaving it insolvent, with $5.5 billion in liabilities outweighing assets by $1.2 billion.
Following the collapse, former CEO Alex Mashinsky faced federal criminal charges and civil lawsuits. Late last year, Celsius creditors approved a $2 billion restructuring plan aimed at guiding the company out of bankruptcy.
Edited by Sebastian Sinclair