Summary:
Tether labels Celsius lawsuit a "shakedown" and vows to fight back.
Celsius claims Tether improperly liquidated $2.4 billion in Bitcoin.
Tether asserts liquidation was done at Celsius' direction to cover an $815 million debt.
The lawsuit raises concerns over jurisdiction and legal foundation.
Celsius filed for Chapter 11 bankruptcy in July 2022, claiming $5.5 billion in liabilities.
Tether Limited has responded fiercely to a lawsuit filed by Celsius Network, labeling it a "shakedown" and "baseless" while vowing to defend itself vigorously in court.
Lawsuit Details
Filed on August 9 in the U.S. Bankruptcy Court for the Southern District of New York, the lawsuit seeks to reclaim approximately $2.4 billion in Bitcoin that Celsius claims was improperly liquidated by Tether prior to its bankruptcy over two years ago.
Tether stated, "No good deed goes unpunished" in its response to the lawsuit, expressing anticipation to contest what it describes as a "contrived, meritless shakedown" that will only benefit the lawyers, bankers, and consultants involved.
Background of the Dispute
According to Tether, it acted in accordance with a 2022 agreement requiring Celsius to post additional Bitcoin as collateral when prices declined. When Celsius failed to meet these requirements, Tether claims it was directed by Celsius to liquidate the Bitcoin to cover an $815 million debt.
Tether emphasized that the lawsuit seeks to impose the costs of Celsius' mismanagement onto them, asserting that the liquidation was conducted at Celsius' direction and with their consent.
Legal Concerns
Tether also challenged the legal basis of the lawsuit, citing an âobvious misapplication of the lawâ and raising jurisdictional concerns. The company reassured investors of its financial stability, reporting $12 billion in consolidated equity as of June 30, 2024.
Celsius's Claims
In contrast, Celsius argues that Tether failed to provide the contractually agreed-upon 10-hour timeframe for collateral deposits upon receiving the final demand. Celsius claims that Tetherâs actions led to the destruction of their residual interest in the collateral, with the current value of Bitcoin accounting for $2.4 billion in claims.
Celsius, which filed for Chapter 11 bankruptcy in July 2022, faced major financial turmoil, with liabilities exceeding assets by $1.2 billion. The company's former CEO, Alex Mashinsky, now faces federal criminal charges and civil lawsuits. Recently, Celsius creditors approved a $2 billion restructuring plan aimed at navigating the company out of bankruptcy.
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