- Celsius sues Tether for $2.4 billion.
- The lawsuit alleges Tether inappropriately liquidated its collaterals.
Celsius sues Tether
As a seasoned crypto investor with a decade of experience under my belt, I find myself following the latest developments between Celsius and Tether with a mix of intrigue and skepticism. Having witnessed the rise and fall of numerous players in this volatile market, I’ve learned to expect the unexpected and appreciate a good legal battle for what it can reveal about the inner workings of these companies.
To strengthen its financial position, bankrupt cryptocurrency platform Celsius has filed a lawsuit against Tether. The legal action is aimed at recovering approximately 39,542 bitcoins, currently valued at over $2.4 billion according to current market rates.
The legal action taken against Tether seeks to reclaim transactions (withdrawals and preferential payments) that the company carried out over the past three months prior to its bankruptcy, with the intention of recovering those funds.
In the year 2022, when market trends began to drop, Tether asked Celsius to provide more collateral to support its outstanding loans. Moreover, it borrowed an additional $300 million worth of USDT, only to file for bankruptcy just three months afterwards.
As stated in the legal claim, following Tether’s June 2022 request for 3000 Bitcoin, they subsequently sought additional collateral as well.
As a crypto investor, I’ve been closely following the developments between Celsius and Tether. Despite Celsius’ efforts to secure the necessary funds within the given timeframe, Tether swiftly chose to liquidate Celsius’ 39,542 bitcoin collateral in just hours. The legal dispute claims that this action was taken based on a clause within their agreement, which I believe is currently under scrutiny for its fairness and timeliness.
“When Celsius was financially unable to meet its obligations, Tether used the deposited Bitcoins worth 39,542.42 (Celsius’s property) to repay itself a loan it had previously given to Celsius at a lower than fair market value.”
Tether’s CEO Paolo Ardoino responded to the lawsuit through X adding that,
“Over two years past, a groundless legal action has emerged, seeking to compel us to return the previously sold bitcoins in order to rectify Celsius’ financial standing.”
In July 2022, following a move to freeze customers’ accounts and halt withdrawals in June, Celsius sought bankruptcy protection. Prior to its downfall, the company’s worth was estimated at approximately $3 billion.
As a researcher delving into the financials, I’ve discovered that the company has roughly estimated its total assets and liabilities to fall between $1 billion and $10 billion. This estimation is based on approximately 100,000 creditors involved in their financial dealings.
Similarly, the company stated they held approximately $167 million in available cash. Despite experiencing a surge during the pandemic, their operations faced review and examination.
Celsius battles with other crypto firms
Over the past few legal disputes, Celsius has taken several crypto companies to court. For instance, at the end of last month, an action was initiated against Bancor DAO in a lawsuit, claiming that the design of their system contained inherent flaws since its inception.
In simpler terms, the plan was for the costs associated with protecting against temporary losses (impermanent loss) to be covered by fees from the protocol’s operations. Unfortunately, the income generated by the protocol wasn’t enough to cover these costs.
Also, the crypto lender sued Badger Dao and Compound Labs in other lawsuits filed last month.
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2024-08-11 17:11