In an effort to reclaim $2.4 billion in Bitcoin that Celsius alleges Tether unlawfully sold at the bottom of the market as the crypto lender began to collapse, the company filed a lawsuit against Tether on Friday.
Tether is now included in the list of targets of Celsius lawsuits, which also includes Badger DAO, Compound Labs, and Bancor DAO. Badger DAO is being sued for losses incurred as a result of its 2021 hack, Compound Labs for losses associated with a November 2020 oracle incident, and Bancor DAO, which is owned by the niece and nephew of Israeli Prime Minister Benjamin Netanyahu, among others, for additional losses.
Celsius’s lawsuits toward the other DAOs are more general complaints of mismanagement leading to losses, while the suit against Tether is the latest in a litany of litigation intended to regain withdrawals and preferential payments made by Celsius in the crucial 90-day period before its insolvency. In a blog post, Tether has categorically refuted any misconduct and referred to the lawsuit as “Shake Down litigation.”
Celsius claims that 39,542 bitcoin, which are currently valued at over $2.4 billion, were used as collateral for loans it had obtained from Tether, the world’s largest stablecoin issuer, in the largest of the lawsuits filed on Friday. Tether requested additional collateral from Celsius to support its loans when prices began to decline in early 2022. The lender transmitted the collateral in the form of bitcoin on numerous occasions throughout May and June. In April 2022, Celsius secured an additional $300 million in USDT in loans, which were executed within 90 days of its bankruptcy filing in July of that year.
The complaint claims that “Tether would have had almost $350 million less in collateral” and that “Tether would not have been able to come close to bringing itself whole on its $812,330,000 USDT loan to Celsius” if the transfers had not taken place.
After Celsius met Tether’s request for over 3,000 bitcoin worth of additional collateral on June 12, 2022 (equivalent to approximately $350 million at the time), the stablecoin issuer asked for a second collateral demand, according to the lawsuit. While Celsius was purportedly assembling the funds during a contractually mandated ten-hour waiting period, Tether opted to liquidate Celsius’s entire collateral, 39,542 bitcoin, within hours.
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