Federal Court Advances Celsius Network’s $4 Billion Lawsuit Against Tether

• After rejecting Tether’s dismissal attempts, a federal court allowed Celsius Network to continue its $4 billion lawsuit against Tether. 

• Celsius claims Tether improperly sold over 39,000 Bitcoin in 2022 and kept an additional 15,600 as collateral without returning them. 

• The case will proceed under U.S. bankruptcy law and could set important precedents for cryptocurrency lending disputes.

A federal judge has permitted Celsius Network to proceed with its massive $4 billion legal action against stablecoin giant Tether. The ruling represents a significant victory for the bankrupt cryptocurrency lender in one of the industry’s most closely watched legal disputes.

The court rejected Tether’s motion to dismiss critical portions of the lawsuit. This decision allows Celsius to pursue claims that Tether improperly liquidated and seized more than 57,000 Bitcoin during the cryptocurrency market turmoil in 2022.

Contract Breach Allegations Drive Core Dispute

The lawsuit centers on Tether’s controversial sale of 39,542 Bitcoin in June 2022. Celsius maintains that this transaction violated their contractual agreement and breached a mandatory 10-hour waiting period. The company argues Tether executed the sale at prices significantly below market value, resulting in losses exceeding $100 million.

Celsius also claims Tether failed to return an additional 15,600 Bitcoin that had been posted as extra collateral. The combined Bitcoin at stake totals over 55,000 coins. Celsius argues these actions unfairly enhanced Tether’s position as a creditor while disadvantaging thousands of other Celsius creditors.

The allegations extend beyond simple contract disputes. Celsius accuses Tether of fraudulent transfers and claims the stablecoin issuer deliberately manipulated the situation to its advantage during a critical period of market instability.

Jurisdiction Challenge Fails to Protect Tether

Tether attempted to escape U.S. court oversight by challenging jurisdiction. The company argued that American courts lacked authority since Tether operates through entities incorporated in the British Virgin Islands and Hong Kong.

The federal judge dismissed this defense strategy. The court determined that U.S. jurisdiction applies because the disputed transactions involved American personnel and domestic financial systems. This ruling enables Celsius to pursue its claims under U.S. bankruptcy law provisions.

The jurisdictional victory allows Celsius to advance multiple legal theories, including breach of contract and fraudulent transfer allegations. Each claim could potentially result in substantial monetary damages if proven successful.

The timing of this legal battle coincides with Tether’s expanding Bitcoin portfolio. The company recently acquired a controlling interest in investment firm Twenty One Capital through a transaction involving nearly 37,230 Bitcoin worth approximately $3.9 billion.

Tether CEO Paolo Ardoino has publicly rejected speculation about a potential initial public offering. However, the company’s substantial and growing Bitcoin reserves make the outcome of this lawsuit particularly significant for cryptocurrency markets.

The legal proceedings will likely influence courts’ interpretation of cryptocurrency lending agreements and collateral arrangements. The case may establish important precedents for the broader digital asset industry, especially regarding creditor rights during market stress periods.