Bankruptcy Judge Greenlights Celsius’ $4.3B Lawsuit Against Tether Over Collateral Dispute

A New York bankruptcy judge has ruled that Celsius can advance most of its $4.3 billion lawsuit against Tether, the stablecoin issuer.

The decision permits Celsius to pursue claims that Tether wrongfully liquidated its bitcoin collateral before the agreed-upon waiting period had expired.

According to court documents filed Monday, Celsius initiated the lawsuit in August 2024, accusing Tether of conducting a premature “fire sale” of its collateral—39,542 BTC, valued at approximately $4.3 billion at current market prices—before the mandatory 10-hour window had lapsed.

The dispute stems from loans Celsius secured from Tether using cryptocurrency, including bitcoin, as collateral. In 2022, Tether reportedly demanded additional collateral from Celsius to support these loans.

Chief Bankruptcy Judge Martin Glenn, overseeing the case, determined that alleged verbal authorization from Celsius’ then-CEO Alexander Mashinsky to liquidate the collateral was “insufficient.” The judge emphasized that disregarding the 10-hour waiting period, as stipulated in the agreement, could amount to a breach of contract.

Tether has denied any wrongdoing, calling the lawsuit “baseless” when it was first filed. “This case exemplifies the saying, ‘No good deed goes unpunished,'” Tether stated last year. “Instead of acknowledging the validity of our long-standing agreement, Celsius is attempting to shift the consequences of its own mismanagement onto Tether.”