Celsius Lawsuit Moves Forward as Judge Denies Key Tether Objections

Highlights:

• A court has given the green light to Celsius to pursue breach of contract and fraud claims against the stablecoin issuer.
• Celsius contends that Tether sold Bitcoin too early, causing billions in losses and violating loan agreement terms.
• The court ruled that Celsius lawsuit can proceed, as the case involves United States-based staff and financial systems.

A U.S. bankruptcy judge in New York ruled that claims made by the Celsius Network against Tether will proceed. The ruling rejected Tether’s motion to dismiss most of the case. Tether argued the court lacked jurisdiction due to its overseas base. However, the court found sufficient links to the United States through personnel, communications, and financial activity.

Judge allows Celsius lawsuit against Tether over $4B BTC liquidation to proceed

A U.S. bankruptcy judge has ruled that the lawsuit filed by bankrupt crypto lender Celsius against Tether can move forward, rejecting key parts of Tether’s motion to dismiss, according to…

— CoinNess Global (@CoinnessGL) July 2, 2025

Celsius accused Tether of improper sale of its Bitcoin collateral in June 2022. The court concurred that there were indications of domestic misconduct as indicated by the complaint. Thus, the claims of breach of contract, fraudulent transfer, and preference were permitted by the judge to proceed. Other counts were thrown out, but the most critical ones are still in the court.

The lawsuit centers around an $812 million loan taken by Celsius from stablecoin issuer Tether. Celsius had offered a collateral of more than 39,500 Bitcoin. At the time of the crypto market drop, Tether issued a margin call and sold the BTC.

Tether is accused of transferring the proceeds to its Bitfinex wallets. According to Celsius, this breached the loan conditions and resulted in huge losses. The court considered these events to be closely related to the U.S. activity. This relationship gave the court the legal jurisdiction to have control over the dispute.

Bitcoin Liquidation Raises Claims of Contract Violation

Celsius, a once well-known global cryptocurrency platform and a leader in Bitcoin mining, claims Tether ignored a 10-hour notice period before liquidating its Bitcoin. The agreement required a delay to allow Celsius time to post more collateral. Instead, Tether sold the assets at an average price of $20,656 per Bitcoin. Celsius says the sale price was too low given market conditions.

Tether responded that it acted within its rights. It also argued that the entire process happened outside the United States. Tether suggested that the process made the matter outside the jurisdiction of U.S. courts. Nonetheless, Celsius provided evidence showing that the liquidation was connected to U.S. systems. The evidence involved American workers, email, and bank accounts used in the process. The judge found this evidence sufficient to establish domestic jurisdiction. Consequently, Celsius can seek its remedies in American courts.

Tether submitted its motion to have the case dismissed in August 2024. The company claimed that Celsius did not express justifiable claims under the laws of the U.S. or British Virgin Islands. The court differed and held that a trial on material issues needed to occur.

Celsius Lawsuit Progress Comes Amid Creditors’ Recovery

The Celsius lawsuit is proceeding even as the company pays creditors under its Chapter 11 program. After Celsius filed for bankruptcy in July 2022, they have already paid back more than 2.5 billion to previous users.

In June 2025, the former CEO, Alex Mashinsky, was denied any bankruptcy payments by the court. It also barred claims by entities connected to him. This allowed more money to be distributed to creditors. Celsius successfully came out of bankruptcy in January 2024. The company is still dealing with pending legal cases. Meanwhile, the decision in the Celsius lawsuit against Tether can affect subsequent distributions.