The defunct cryptocurrency exchange Celsius has taken legal action against Tether, claiming the stablecoin issuer mishandled Bitcoin collateral.
Celsius is demanding a staggering $3.5 billion in Bitcoin returns, damages, and legal fees.
At the heart of the dispute is a significant amount of Bitcoin that Celsius provided to Tether as collateral.
According to Celsius, during its bankruptcy proceedings, it handed over 39,542.42 BTC to Tether in exchange for a loan in USDT, Tether’s stablecoin pegged to the U.S. dollar.
As the value of Bitcoin began to decline, Celsius was required to provide additional collateral to avoid liquidation.
However, the lawsuit alleges that Tether liquidated the Bitcoin at a price that only covered the outstanding debt, leaving Celsius no opportunity to add more collateral and avoid the selloff.
Tether, on the other hand, has dismissed the lawsuit as baseless.
The company claims that it acted under Celsius’s instructions, stating that Celsius itself directed the selloff after choosing not to provide further collateral.
Tether has vowed to vigorously defend itself against what it describes as “unwarranted allegations,” and reassured its stakeholders that its $12 billion in consolidated equity ensures the stability of its operations, regardless of the outcome of the case.
The exact amount Celsius is seeking has been a point of contention. While the figure of 39,542.42 BTC, currently valued at around $2.4 billion, has been widely reported, court documents reveal that Celsius is pursuing a larger amount.
The exchange is asking the court to void two additional transfers made during the same period, bringing the total to 57,428.64 BTC, which equates to approximately $3.48 billion at current market rates.
Additionally, Celsius is seeking no less than $100 million in damages, with further amounts to be determined at trial.
