By Adedapo Adesanya
Top cryptocurrency stablecoin company, Tether, has said it would defend itself against litigation brought by Celsius Network Limited, a case it regarded as a “shake down”
On August 9, 2024, Celsius, acting through the Blockchain Recovery Investment Consortium, LLC, filed suit against Tether Limited, and certain of its affiliates, in the United States Bankruptcy Court for the Southern District of New York.
The stablecoin issuer asserts that Celsius Network’s lawsuit, filed with the United States Bankruptcy Court, is an attempt to “improperly impose the costs of Celsius’ mismanagement and failure on Tether.”
In a statement sent to Business Post, Tether vowed not to fall prey to “shameless litigation” and expressed confidence that the court would rule in its favour.
Tether, which issues USD₮, the biggest stablecoin by market capitalization, action follows revelations that Celsius Network wants the court to compel Tether to return $2 billion in bitcoin (BTC) lost due to alleged fraudulent transfers.
The claims arise out of a 2022 agreement under which Tether made USD₮ available to Celsius, in amounts that Celsius requested at the time.
“This baseless lawsuit against Tether proves the adage that “no good deed goes unpunished,” Tether said.
Under the agreement, Celsius posted Bitcoin (BTC) to Tether as collateral. However, as the price of BTC began to fall in June 2022, the agreement required Celsius to post additional collateral to avoid the liquidation of its BTC. When Celsius chose not to post additional BTC it directed Tether to liquidate the BTC collateral Tether held in order to close out its roughly 815 million USD₮ position with Tether.
Tether claimed that rather than recognising the clear validity of the agreement entered into years before Celsius’ bankruptcy, this lawsuit seeks to improperly impose the costs of Celsius’ mismanagement and failure on Tether.
“Over two years following its arm-length agreement with Tether—and armed with the benefit of hindsight—this lawsuit incredibly now seeks the return of approximately US$2.4 billion worth of BTC from Tether, despite the BTC being liquidated at Celsius’ direction and with Celsius’ consent at June 2022 prices,” it added.
The stablecoin issuer claimed that Celsius’ complaint is not only an “obvious misapplication” of the law but also raises substantial jurisdictional questions.
Tether also said that in the remote event of Celsius prevailing in court, the stablecoin issuer’s financial position is such that token holders will not be impacted.
“We look forward to responding in court to this contrived, meritless shakedown that will benefit nobody other than the lawyers, bankers and consultants involved in bringing this case.
“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.”
“As a result, even in the most remote scenario in which this baseless lawsuit will get somewhere, Tether token holders will not be impacted,” the statement concluded.
As of the time of this report, USD₮ is selling around $0.9999, down 0.04 per cent in the last 24 hours.
Modupe Gbadeyanka