Tether CEO Paolo Ardoino Calls Celsius Lawsuit a ‘Baseless Shakedown’
Tether’s CEO, Paolo Ardoino, has quickly dismissed a lawsuit filed by the bankrupt crypto lender Celsius, labeling it a “baseless shakedown.” He assured Tether’s token holders that the outcome of the case would not impact them in any way.
Celsius Takes Legal Action in Effort to Recover Funds
Two years after filing for bankruptcy, Celsius is attempting to recover some of its losses by suing Tether. The lawsuit, submitted on August 9 in the US Bankruptcy Court for the Southern District of New York, accuses Tether of improperly liquidating over $800 million worth of Bitcoin (BTC) in mid-2022.
The origins of this dispute trace back to a loan agreement established in 2020, under which Celsius borrowed USDT and EURT from Tether at low interest rates, using Bitcoin as collateral. However, during the bear market of 2022, Bitcoin’s value dropped sharply, putting Celsius’s collateral at risk.
According to the lawsuit, Tether requested additional collateral on June 13, 2022, as BTC prices fell. Celsius claims that it was entitled to a ten-hour window to provide the extra collateral but alleges that Tether liquidated 39,542.42 Bitcoin—Celsius’s entire collateral—before the deadline expired. Celsius argues that this move unfairly benefited Tether as a creditor over others.
The lawsuit further alleges that Tether’s actions, which it values at over $2 billion in today’s terms, improperly eliminated Celsius’s remaining interest in the collateral.
Tether’s Response
A day after the lawsuit was filed, Tether and Paolo Ardoino responded, refuting the claims made by Celsius. Ardoino explained that Tether routinely issues USDT to customers who provide Bitcoin as overcollateralization. If the value of this collateral drops below a certain level, the borrower is required to add more collateral, or Tether has the right to liquidate the position.
Ardoino countered Celsius’s claims by stating that Celsius itself directed Tether to sell the Bitcoin collateral during the market downturn in mid-2022. Tether complied with this request, liquidated the BTC, and returned the excess funds to Celsius.
“Now, more than two years later, this unfounded lawsuit is attempting to argue that we should return the Bitcoin that was sold to cover Celsius’s position. There are numerous flaws in the claimant’s filing, and we are very confident in the strength of our contract and the actions we took,” Ardoino stated.
Tether’s official statement further described the lawsuit as a “meritless shakedown” that would only benefit the legal and financial professionals involved in the case.
Ardoino reassured Tether’s token holders that even in the unlikely event that the lawsuit progresses, they will not be impacted. He highlighted Tether’s financial stability, noting that the company has nearly $12 billion in equity.
As this legal case develops, Tether remains confident in its defense, while Celsius continues its efforts to recover from the financial difficulties that led to its collapse.
