The US Bankruptcy Court ruled that Celsius lawsuit against Tether could continue. Celsius alleged that the USDT Stablecoin issuer breached the contract to settle $4 billion worth of Bitcoin as it became insolvent.
Some Celsius creditors hope that the discovery process will reveal why Tether disposed of these assets very quickly. However, since most of the creditors have already been repaid, it is unclear how the company will spend the money if it wins.
Tether faces a $4 billion lawsuit
The Celsius bankruptcy in 2022 was one of the biggest collapses in the history of the code, sending shockwaves through the Defi Ecosystem.
Last year, CEO Alex Mashinsky pleaded guilty to fraud charges and faced 20 years in prison.celsius sued Tether over several contested Bitcoin transfers. Today, Judge Martin Glen ruled that the case could proceed..
Essentially, Celsius claims that Tether violated the company’s previous agreement to settle 39,500 BTC, which is now worth around $4 billion.
The USDT Stablecoin issuer held these assets as loan collateral and disposed of them to recover their $812 million in debt as Celsius collapsed. Nevertheless, Celsius claims the move is illegal as he violated the 10-hour waiting period specified in the contract.
So why is this important? Celsius has already repaid 93% of its creditors, and the founder/CEO is currently in prison. It is not clear how celsius could use the $4 billion, with Tether CEO Paolo Ardoino denounced the lawsuit as Shakedown.
Nevertheless, Celtic creditors like Otis Davis responded warmly to the announcement. Specifically, he believes that the formal legal battle may reveal why Tether ignored the waiting period and perhaps revealed evidence of past fraud.
“The lawyers handling this case should go deeper to reveal their findings… a scam. I won’t solve them because I know that I will discover criminal acts during the discovery stage of the case,” he argued.
However, you may not be able to really dig into this topic. Celsius also sought to argue that Tether’s overseas subsidiary ensured that British Virgin Islands laws were related to the case, but Judge Glenn rejected the claim.
Celsius and its creditors overwhelmingly believe that by liquidating this BTC very quickly, it has been flooded with connected things. However, some community members believe it could be a simple error. After all, Celsius was bankrupt at the time.
No matter what happens in the next round of the lawsuit, $4 billion is in danger. That total alone seems enough to attract the attention of the crypto community. Whether Celsius and Tether settle from the courtroom or not, this fight can have long-term consequences.
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