Key Takeaways:

A U.S. bankruptcy judge ruled that Celsius’s $4B lawsuit against Tether can move forward.

Celsius alleges Tether improperly liquidated 39,500 BTC in 2022 without honoring contractual terms.

Key claims of breach of contract and fraudulent transfer were upheld despite partial dismissal.

Tether faces increasing legal and regulatory scrutiny while continuing Bitcoin expansion.

Celsius $4B Bitcoin Lawsuit Against Tether Moves Forward After Court Ruling

A U.S. bankruptcy judge has allowed Celsius Network’s multibillion-dollar lawsuit against Tether to proceed, denying key parts of Tether’s motion to dismiss. The legal case centers on Tether’s liquidation of over 39,500 BTC—now valued at over $4 billion—during Celsius’s collapse in June 2022.

According to court filings submitted in New York on Monday, Celsius alleges that Tether violated their lending agreement by initiating a forced liquidation of Bitcoin collateral during a market crash, allegedly bypassing a required 10-hour waiting period. Celsius claims the BTC was sold at an average price of $20,656, significantly below market value at the time, and the proceeds were later moved to Tether’s affiliated Bitfinex accounts.

The complaint asserts that Tether's actions constituted:

Breach of contract and violation of good faith under British Virgin Islands law

Fraudulent and preferential transfers under the U.S. Bankruptcy Code

Tether had argued that the case should be dismissed for lack of jurisdiction, citing its incorporation in the British Virgin Islands and Hong Kong. However, the judge ruled that Celsius made a plausible claim of domestic conduct, noting that the communications, personnel, and financial accounts involved were U.S.-based.

While the court dismissed some claims, it allowed Celsius to move forward on core allegations, including breach of contract and fraudulent transfer.

“Celsius has presented a sufficiently plausible case that these transactions were domestic in nature,” the judge wrote.

$4 Billion Loss and Broader Context

Celsius says the liquidation caused over $4 billion in losses at current Bitcoin prices. The lender, once among the largest in crypto, officially exited bankruptcy in January 2024 after an 18-month restructuring process and is now repaying creditors.

The ruling adds to Tether’s mounting legal scrutiny as the stablecoin issuer continues expanding its footprint in Bitcoin markets. In recent months, Tether has acquired a majority stake in Twenty One Capital, now the third-largest corporate holder of BTC, and transferred 37,230 BTC (~$3.9B) to associated addresses.

Tether CEO on IPO Speculation

Separately, Tether CEO Paolo Ardoino dismissed speculation about an initial public offering (IPO) in June, saying there’s "no need" for third-party capital. While he acknowledged that a $515 billion valuation would be "a beautiful number," he suggested it may undervalue Tether given its growing reserves in Bitcoin and gold.

#BTC