U.S. Court Advances Celsius’s $4B Claim Over Tether Bitcoin Sale

A U.S. bankruptcy judge denied key parts of Tether's request to dismiss Celsius Network's lawsuit. The case can now proceed to trial over allegations that Tether improperly liquidated Celsius's Bitcoin collateral in June 2022. Celsius says the damages exceed $4 billion at current Bitcoin prices.

Celsius filed court papers in New York on Monday, claiming Tether executed a fire sale of over 39,500 BTC in June 2022. Tether used the proceeds to cover Celsius's $812 million debt without following the procedures both companies had agreed upon.

According to Celsius, Tether violated their lending agreement by selling the collateral before a required 10-hour waiting period ended. Celsius also alleges Tether breached good faith and fair dealing requirements under the British Virgin Islands law. The complaint further claims the transaction constituted fraudulent and preferential transfers that can be reversed under U.S. bankruptcy law.

The judge ruled that Celsius showed enough evidence of Tether's U.S.-based communications, staff, and financial accounts to establish domestic jurisdiction. The court rejected Tether's argument that the case improperly applied U.S. bankruptcy law to foreign transactions.

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The dispute began when Bitcoin prices dropped sharply, triggering a margin call. Celsius claims Tether sold the collateral at an average price of $20,656 per BTC, which was below market rates at the time, and then transferred the Bitcoin proceeds to its Bitfinex accounts.

Tether improperly liquidated Celsius's Bitcoin collateral during the collapse,

the complaint states. Celsius argues Tether failed to honor the contractual waiting period and required procedures.

Celsius Network declared Chapter 11 bankruptcy in July 2022 after facing a liquidity crisis that threatened its operations. The company completed an 18-month restructuring process and emerged from bankruptcy on January 31, 2024. Since then, Celsius has been working to repay its creditors.