Tether Sued by Celsius Network for Failing to Return $2 Billion in Bitcoin Collateral
The cryptocurrency community is abuzz with the news of a lawsuit filed by Celsius Network Limited against Tether Limited, the stablecoin issuer, for failing to return over $2 billion in Bitcoin collateral.
According to court documents, the agreement between Celsius and Tether dates back to 2022, when Celsius secured USDT from Tether by using BTC as collateral. Following the fall of Bitcoin prices in June 2022, Celsius instructed Tether to sell off the BTC collateral for an $815 million USDT position. Now, they are suing Tether to recover approximately $2.4 billion in BTC, alleging that the stablecoin issuer did not return the collateral as promised.
The lawsuit comes at a sensitive time for both parties, as the cryptocurrency market continues to struggle with the effects of the recent crash. Tether, the biggest stablecoin to date, has been under fire in recent months due to concerns about its reserves and financial stability. As of June 30th, the company’s consolidated equity was worth almost $12 billion, while its reserve funds were used to support tokens in circulation, totaling over $118 billion. Despite the high number of liabilities, Tether’s reserves are not as substantial as previously thought, with estimates suggesting that they stand at around $113 billion, leaving investors with a cushion of over $5 billion.
Tether’s ability to manage risk and fulfill its obligations to creditors has been called into question by the lawsuit. Meanwhile, Celsius is facing a tough challenge in trying to recover assets and remain competitive in the world of crypto lenders. The company, which filed for bankruptcy in July 2022, has since been working hard to rebuild its business and restructure its debts. The Tether lawsuit has cast a shadow over its future, and raised concerns about the future of crypto lending.
The implications of the lawsuit extend beyond the immediate parties involved in the case. There are no established rules or regulations under which entities such as Celsius and Tether can assume significant risks, leading to severe consequences for investors and creditors. Additionally, the lawsuit has emphasized how crucial transparency and accountability in the crypto space must be.
The lawsuit has raised concerns about the due diligence and risk management practices of companies such as Celsius, who borrowed from Tether without fully comprehending the risks. As the lawsuit comes to a close, the crypto community will be closely monitoring the legal process for updates.
For more information on the crypto lending market and the implications of this lawsuit, read our article on “Crypto Lending Market Uncertainty: What’s Next for Celsius and Tether?” on CoinSeeks.com.
The lawsuit is causing concern in the crypto lending and issuance landscape. Will Tether be required to return Bitcoin collateral, or will the courts follow suit with the stablecoin issuer? It is evident that the crypto industry requires more transparency, accountability, and regulation to avoid similar conflicts in the future.
