Paolo Ardoino, the CEO of Tether, broke silence over the ongoing lawsuit that Celsius, a bankrupt lending protocol, filed against the stablecoin issuer company. According to the lawsuit, Celsius claims to seek $2.4 billion from the stablecoin issuer as compensation for loss caused due to fraudulent Bitcoin transfer and breaching contract rules. Defending the claims, Ardoino stated that all the allegations against Tether were pointless.
JUST IN: Celsius sues Tether, demanding $2.4 billion worth of #Bitcoin.
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— Watcher.Guru (@WatcherGuru) August 10, 2024
Tether Vs. Celsius: A Legal Dispute Since 2022
The ongoing legal battle between Celsius and Tether finds its basis in the initial agreement made in 2020, when Celsius managed to get low-interest loans with USDT, providing significant collateral (in BTC) as a borrower. This step allowed users to borrow stablecoins, including USDT and EURT, against BTC at that time.
However, when Bitcoin price plummeted heavily in June 2022, Tether demanded more collateral from the company per the agreement. When the company failed to provide the additional collateral in BTC, the stablecoin issuer liquidated positions worth $815 million (at that time) with the company’s consent. Similarly, a legal dispute started when Celsius made the stablecoin company responsible for the loss.
Tether’s CEO Defends Allegations of Seeking $2.4 Billion
On August 9, Celsius Network Limited filed a legal case against Tether in the United States Bankruptcy Court for the Southern District of New York over violating the contract agreement and liquidating 39,542 BTC held as collateral.
In response, Tether labeled it a baseless lawsuit and expressed that it seeks to impose the cost of Celsius’s mismanagement and failure on Tether. Despite being aware of the collateral agreement, Tether states that Celsius demands an incredible amount of $3.5 billion (as of current BTC value), inclusive of the original $2.4 billion in legal fees and other damages.
On the other side, Ardoino claims Celsius itself reached out to Tether with requests to sell BTC held in the collateral. Similarly, the stablecoin company sold Bitcoin in June 2022 and returned excessive funds to the firm as requested.
While explaining the collateral agreement on his X account (formerly Twitter), Ardoino noted in a statement:
If the price of bitcoin (the collateral) falls below the margin call price, then the borrower needs to send more collateral. If more collateral is not sent, Tether has the right to liquidate the customer’s position.
He continued that this lawsuit is trying to get back BTC that were sold to cover Celsius’s position. He added that the legal claims against Tether lack merit-based allegations. However, he assured that Tether would fight the legal battle against such shameless money grabs until the end. The company ensures the user’s safety and security without any doubt, he pressed.
Tether Plans to Continue Legal Fights
To reassure USDT users, Tether revealed that the company had gained equity worth $12 billion as of Q2 of 2024. The company noted it is doing a profitable business with growth accruing monthly. Even in the worst-case scenario of this baseless lawsuit, USDT holders will not be affected. Meanwhile, Tether disclosed that the firm will set a precedent for the whole crypto industry by fighting Celsius legally.
While defending the allegations in its blog post, the firm concluded in a statement:
As we’ve said many times, Tether will never fall prey to shameless litigation money grabs. We will vigorously defend ourselves against the unwarranted allegations made against us, and we expect to prevail in this litigation.
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