A US bankruptcy court has granted bankrupt crypto lender Celsius Network permission to pursue legal action against stablecoin issuer Tether. Celsius alleges Tether unlawfully liquidated 39,500 Bitcoin (BTC) worth approximately $4 billion to recover an $812 million loan during Celsius’s financial collapse, accusations Tether has previously labeled a ‘baseless shakedown’.
Celsius contends Tether foreclosed on and sold this massive BTC holding while Celsius, despite its insolvency, was actively engaged in formulating a restructuring plan for creditors. The lender positions the lawsuit as a necessary effort to maximize recoveries for its stakeholders.
This case unfolds against a complex backdrop. Celsius has already satisfied approximately 93% of its obligations to creditors through its approved bankruptcy restructuring plan. Furthermore, its former CEO, Alex Mashinsky, was convicted last year on multiple fraud charges related to the company’s downfall and is currently serving a prison sentence.
The decision opens a path for potentially deep discovery into the mechanics and timing of Tether’s actions during Celsius’s crisis. Legal perspectives are sharply divided: some creditors support the lawsuit, viewing it as crucial for accountability and recovery, while skeptics, including those aligned with Tether, dismiss it as an unwarranted attempt to extract funds.
The lawsuit directly addresses critical unresolved questions concerning the handling of multi-billion dollar asset liquidations during crypto platform insolvencies. Its outcome could establish significant precedent, potentially forcing changes in crypto lending practices and triggering increased regulatory scrutiny over major stablecoin issuers like Tether, impacting broader market dynamics.