Tether Settles Celsius Bankruptcy Claims With $299.5 Million Payment
Background on the Tether and Celsius Lawsuit
Tether settles Celsius bankruptcy claims with a reported $299.5 million payment, resolving a complex dispute over the liquidation of Bitcoin collateral. The settlement was announced by the Blockchain Recovery Investment Consortium (BRIC), a partnership between GXD Labs and VanEck, on July 9, 2024. It follows an adversary proceeding brought in August 2024 in the U.S. Bankruptcy Court for the Southern District of New York. The Celsius Network bankruptcy estate originally sought to recover much higher sums from Tether, alleging improper handling of collateral during the crypto lender’s collapse.
Celsius Network’s lawsuit claimed that Tether wrongly liquidated nearly 39,542 Bitcoin—worth about $4.5 billion—as the crypto lender faced bankruptcy in July 2022. The court filing alleged that Tether violated contract terms when it liquidated the collateral without giving Celsius the required 10-hour window to deposit additional funds.
Details of the Settlement and Market Reaction
Tether, issuer of the USDT stablecoin, consistently argued that it acted in accordance with a 2022 agreement, which required Celsius to post more collateral if Bitcoin prices dropped. After Celsius failed to meet margin calls, Tether said it liquidated the Bitcoin collateral at Celsius’s direction to settle an $815 million debt.
The settlement of $299.5 million represents a fraction of the original amount sought in the lawsuit. Tether CEO Paolo Ardoino confirmed on X (formerly Twitter) that the company had settled “all issues” related to the Celsius bankruptcy suit. GXD Labs Managing Partner David Proman said in a statement, “We are pleased to have resolved Celsius’s adversary proceeding and related claims against Tether.” Reporting via Decrypt.
News of the resolution brings closure to a significant legal dispute in the cryptocurrency sector, with BRIC, established in early 2023, continuing to oversee the complex asset recovery for the Celsius estate. Celsius emerged from bankruptcy protection in January 2024, with BRIC appointed as asset recovery manager to maximize returns for creditors.
What’s Next for Celsius Estate and Its Creditors?
The Celsius estate remains in a wind-down phase, managing the remaining portfolio of illiquid and litigation assets for the benefit of creditors. The recent settlement with Tether is part of ongoing efforts to recover value from a range of counterparties following Celsius’s collapse.
Notably, Celsius Network’s former CEO Alex Mashinsky was sentenced in May 2024 to 12 years in prison on securities and commodities fraud charges tied to misuse of customer funds and manipulation of the company’s CEL token price. In June 2024, Mashinsky forfeited rights to any claims related to the bankruptcy proceedings.
For more updates on cryptocurrency bankruptcies and legal developments, readers can visit the Vizi Cryptocurrency section.
