A US bankruptcy court has allowed Celsius to move forward with the majority of its $4 billion lawsuit against Tether, a stablecoin issuer, as per a recent court filing. The bankrupt cryptocurrency lender had filed a lawsuit against Tether, claiming that it had improperly liquidated nearly 40,000 bitcoins, valued at over $4.3 billion, which were being held as collateral for a loan in June 2022. Celsius' lawyers argued that Tether did not provide sufficient time for Celsius to meet its collateral demands, despite having enough bitcoin on its balance sheet to do so, given the pause on customer withdrawals.
The lawyers claimed that if Celsius had been given the opportunity to meet the collateral demand, it could have avoided selling its bitcoin at a low market price. Instead, the sale was done for the benefit of Tether alone. Tether had previously stated that it would fight the lawsuit, calling it 'baseless' and a 'shameless litigation money grab'.
However, the judge overseeing the case disagreed, stating that the alleged oral permission given by Celsius' then-CEO to liquidate the bitcoin collateral was 'insufficient' and that not providing Celsius with the 10-hour window to post collateral as per their contract could be a breach of contract.