Celsius To Sue Tether For $4 Billion: Here’s Why

Key Insights:

Celsius is suing Tether for $4 billion over its premature liquidation of 39,500 Bitcoin during Celsius’s 2022 collapse.

Celsius claims Tether violated lending agreements, acted in bad faith and made fraudulent transfers by selling Bitcoin below fair market value.

This $4 billion lawsuit shows that the events of 2022 are far from over.

One of the most heated legal battles in the US is about to become more serious. A U.S. bankruptcy court recently allowed Celsius’s $4 billion lawsuit against Tether to move forward.

The case is centered around a major Bitcoin liquidation that took place during Celsius’ collapse in 2022. This moment in history continues to create debates over how institutional actors should behave during market crises, and here’s why such a massive lawsuit is being filed.

Tether’s “Fire Sale” of Bitcoin

The reason for this lawsuit comes from a serious accusation.

Celsius alleges that Tether (issuer of the USDT stablecoin) violated a lending agreement by prematurely liquidating more than 39,500 Bitcoin belonging to Celsius. At the time of the sale, Bitcoin was trading at around $20,656, which Celsius claims was below fair market value.

Court allows Celsius to continue $4 billion lawsuit against Tether.

Celsius filed a lawsuit against Tether, seeking $4 billion for the illegal sale of $39,500 BTC in June 2022.

The court rejected Tether’s attempt to dismiss the case – the case continues.

At stake are issues of… pic.twitter.com/XIRxCMcJK4

— Nehal (@nehalzzzz1) July 2, 2025

As it stands, those coins are now worth over $4 billion and Celsius wants that value back. According to court documents filed in New York, Celsius owed Tether $812 million in debt.

Tether held the Bitcoin as loan collateral and chose to sell it off in June 2022, as Bitcoin’s price plunged. Celsius argues that Tether didn’t follow the agreed-upon procedures (which is a 10-hour waiting period) and liquidated the assets too quickly in a so-called “fire sale.”

Breach of Contract, Bad Faith and Bankruptcy Code Violations

Celsius’s legal complaint doesn’t stop here by any means. The lender also accuses Tether of violating principles of good faith and fair dealing under British Virgin Islands law.

It also wants compensation because tether “made fraudulent and preferential transfers” that can be reversed under the U.S. Bankruptcy Code.

Put simply, Celsius believes Tether acted dishonestly and took advantage of its position while Celsius was in distress. The complaint also claims that Tether funneled the proceeds from the sale into its own Bitfinex accounts.

Tether’s Defense, And Where It Fell Short

Tether responded by asking the court to throw out the case. The company argued that the U.S. court doesn’t have jurisdiction because Tether is based in Hong Kong and the British Virgin Islands.

Secondly, the allegations amount to an “impermissible extraterritorial application” of U.S. law. Finally, Tether says that Celsius failed to state valid legal claims.

While some parts of Celsius’s lawsuit were dismissed, Judge Martin Glenn eventually ruled that some of them, including breach of contract, fraudulent transfer and preference claims can proceed.

The judge agreed that, even though Tether is based overseas, the company’s actions involved U.S.-based personnel, financial accounts and communications. This, according to Judge Glenn, was enough to establish jurisdiction.

A Bankruptcy Aftermath That Won’t Stay Quiet

Celsius was once one of crypto’s largest lending platforms. However, its collapse in 2022 left customers and investors reeling.

The fallout included a Chapter 11 bankruptcy process that lasted 18 months, as 93% of creditors received compensation during the restructuring. During this time, former Celsius CEO Alex Mashinsky pleaded guilty to fraud and is now serving 12 years in prison.

ALEX MASHINSKY OF CELSIUS GETS 12 YEARS IN PRISON FOR FRAUD pic.twitter.com/y1zegYQCXd

— Coffeezilla (@coffeebreak_YT) May 8, 2025

The company officially exited bankruptcy in January of last year. Yet despite having repaid most creditors, Celsius continues to hash things out with Tether.

Is This Just a Legal Shakedown?

Tether’s CEO Paolo Ardoino has publicly dismissed the lawsuit as a “shakedown,” and even argues that Celsius is merely seeking a windfall despite already resolving most of its obligations.

Others within the crypto community speculate that Tether liquidating Celsius’s Bitcoin could have simply been a mistake, not fraud.

Overall, regardless of whether Celsius wins or loses, this lawsuit has already become a major talking point when it comes to crypto regulation and ethics. A $4 billion claim, even after creditors have been repaid shows that the events of 2022 are far from over.

The post Celsius To Sue Tether For $4 Billion: Here’s Why appeared first on Live Bitcoin News.

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