Tether Limited, the issuer of the largest stablecoin USDT, has strongly dismissed a lawsuit filed by Celsius Network Limited, calling it baseless.
The lawsuit seeks to recover $2.4 billion worth of BTC collateral that was, according to Tether, liquidated with Celsius’ consent.
In a press release on Saturday, Tether accused the defunct crypto lender of attempting to shift blame for its financial woes, calling the lawsuit “baseless” and an example of “meritless shakedown.”
The lawsuit, filed on Aug 9, in the United States Bankruptcy Court for the Southern District of New York, revolves around a dispute over a 2022 agreement. The lawsuit alleges that Tether wrongfully liquidated approximately $2.4 billion worth of BTC collateral in June 2022.
Celsius claims that this liquidation was unjust and is now seeking the return of the liquidated BTC. Tether, however, claims that the liquidation took place under “Celsius’ direction and with Celsius’ consent at June 2022 prices.”
Background Of The Dispute
In 2022, as part of an agreement, Tether provided USDT to Celsius, which filed for bankruptcy in July 2022. In return, Celsius provided Bitcoin (BTC) as collateral.
When the price of Bitcoin began spiraling in June 2022, Celsius faced a margin call. As per the agreement, Celsius was required to put up additional collateral to avoid liquidation of its BTC held by Tether.
According to Tether, Celsius “chose” not to provide additional collateral. Rather, it “directed” Tether to liquidate its BTC collateral to close out its roughly 815 million USDT position with Tether.
Tether’s Response
Tether described the lawsuit as an “obvious misapplication of the law” and claimed that it ignores the “actual facts” underlying the original agreement.
Tether also claimed that the lawsuit intends to shift the burden of Celsius’ failure on Tether by retroactively imposing costs on Tether for decisions made by Celsius during a time of financial distress.
The press release noted:
“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.”
Tether further vowed to “vigorously defend” itself in court and expects the outcome to be in its favor. The press release added:
“Tether will never fall prey to shameless litigation money grabs.”
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