Celsius Network, a well-known crypto lender, had a significant loan agreement with Tether Ltd. dating back to 2020. This arrangement allowed Celsius to borrow stablecoins like USDT and Euro Tether (EURT), with Bitcoin used as substantial collateral. At its peak, the loan reached nearly $2 billion in USDT, secured by tens of thousands of BTC.
Legal Disputes Intensify Over Collateral Actions
As the Celsius and Tether dispute escalates, the spotlight is on the ninety-day period before Celsius’ bankruptcy filing on July 13, 2022. During this time, Tether allegedly demanded and secured more collateral from Celsius, totaling 15,658.21 BTC, and further secured new borrowings with an additional 2,228.01 BTC. These actions, now under legal scrutiny, are claimed to have unfairly benefited Tether, to the detriment of other creditors.
- On June 13, 2022, Tether made a final demand for more collateral.
- Celsius had a narrow 10-hour window to respond, per their agreement.
A Closer Look at the Clawback Demands
The lawsuit suggests that Tether’s liquidation of Celsius’ assets, particularly the Bitcoin collateral, was both hasty and commercially unreasonable. Allegations point to Tether’s actions leading to a “fire sale” of Bitcoin at prices below market value, further complicating the conflict. This move, the lawsuit argues, deprived Celsius of the opportunity to survive the market downturn and added to the lender’s financial woes.
