Tether Faces Celsius Lawsuit; Bitfinex Unveils ‘Stablechain’
Tether has encountered a setback in its attempt to dismiss a lawsuit initiated by the administrators of the insolvent Celsius Network, who are seeking to recover billions of dollars tied to allegedly mishandled Bitcoin tokens. A ruling issued on June 30 by Judge Martin Glenn in the U.S. Bankruptcy Court for the Southern District of New York confirmed the ongoing legal battle between the Celsius debtors and Tether, the issuer of the popular USDT stablecoin. Interestingly, the court filing humorously references it as the “PUNITED STATES” court, likely a typographical error but perhaps indicative of grounds for appeal.
Background of the Case
To provide context, the lawsuit was launched in August, with Celsius administrators claiming that Tether unlawfully liquidated nearly 40,000 BTC tokens—valued at approximately $4 billion—used as collateral for loans secured by USDT. Celsius declared bankruptcy in July 2022 amid serious allegations of fraud, leading to a 12-year imprisonment sentence for its founder, Alex Mashinsky, earlier this year. The operation has been likened to a Ponzi scheme, characterized by Mashinsky’s constant borrowing from various sources to fulfill obligations to others, including customers who bought and staked the platform’s CEL token based on his promises of high returns.
Tether’s Involvement with Celsius
Tether’s relationship with Celsius extended beyond mere loan provision, as internal communications from Mashinsky revealed that Tether was servicing all U.S. clients, including prominent market makers like Cumberland and Jump. As the cryptocurrency market faced a downturn in 2022, Tether initiated margin calls, demanding additional collateral to back the $512 million in USDT that Celsius had borrowed. In a frantic six-week period ending on June 12, 2022, Celsius transferred nearly 17,000 BTC to Tether as collateral. These transactions occurred during the 90 days leading up to Celsius’ bankruptcy filing, making them eligible for reclamation under U.S. Bankruptcy Code.
Legal Developments and Celsius’ Recovery Efforts
In addition to the BTC, Celsius borrowed an extra $300 million in USDT, transferring another 10,700 BTC to Tether, of which over 2,200 BTC was considered excess collateral. As the situation worsened for Celsius, Tether ceased further USDT loans and liquidated the collateralized BTC, allegedly violating a stipulated 10-hour waiting period post-margin call. According to an amended agreement from January 2022, any surplus from the liquidation was supposed to be returned to Celsius, but Tether reportedly sold the BTC at lower-than-market prices, a move Celsius claims resulted in a loss of $100 million.
Judge Glenn’s Ruling on Tether’s Arguments
Last November, Tether sought to dismiss the Celsius lawsuit, arguing that the plaintiffs lacked standing, there was no personal jurisdiction, and they had failed to present a viable claim. Recently, Judge Glenn rejected most of these arguments but dismissed part of the complaint regarding an alleged breach of good faith and fair dealing under British Virgin Islands law, where Tether was based at the time. However, he allowed Celsius the opportunity to revise their complaint. As of last August, bankruptcy administrators had distributed $2.5 billion to 251,000 Celsius creditors, representing about two-thirds of the customer base, while 121,000 creditors have yet to claim their funds, some due to minimal amounts or other undisclosed reasons.
Celsius’ Broader Legal Challenges
Tether is not the sole entity under scrutiny from Celsius administrators; in March, Celsius filed a lawsuit against Chainalysis, accusing the blockchain analytics firm of conducting a knowingly fraudulent audit of Celsius’ asset management in 2020 and misleading investors and customers.
Bitfinex Launches ‘Stable’ Layer 1 Blockchain
In other developments concerning Tether, the Bitfinex digital asset exchange, which is co-owned by Tether, has unveiled plans for a new Layer 1 blockchain called Stable. This blockchain is specifically designed for payments utilizing USDT, aiming to decrease transaction costs and enhance settlement speeds while catering to the needs of everyday users. The official site for Stable claims that USDT is the most widely used asset in the world, although the source for this assertion appears to be absent. Bitfinex’s rationale for launching its blockchain seems to be a desire to capture transaction fees that might otherwise go to third-party networks, such as TRON and Ethereum, which currently host significant amounts of USDT.
Market Dynamics and Strategic Goals
Stable is part of a broader trend where cryptocurrency firms develop their own networks using their native tokens. For instance, Coinbase’s Base, which is built on Ethereum, uses the USDC stablecoin, in which Coinbase has a financial stake. The goal behind Stable appears to be ensuring a share in all on-chain activities that generate revenue. According to Bitfinex, Stable will utilize USDT as its transaction fee token, streamlining operations for users by avoiding the need to hold other volatile tokens. Transaction fees are projected to be minimal, and peer-to-peer transfers of USDT will be fee-free. The network will feature a dedicated Stable Wallet equipped with user-friendly options such as social login and card integration, and it is said to have the capacity to process thousands of transactions per second while providing institutions with guaranteed blockspace and robust security.
Stable’s Development Phases and Future Prospects
The development roadmap for Stable is currently in its first phase, which includes launching the Stable Wallet and implementing a customized proof-of-stake consensus protocol. Subsequent phases will focus on improving transaction efficiency, introducing USDT transfer aggregators, and offering specialized blockspace for enterprises. The final stage will incorporate decentralized application tools and a consensus mechanism based on directed acyclic graphs. Notably, Gabriel Abed, a prominent figure in the cryptocurrency industry and chairman of Binance’s inaugural board of directors, has been identified as a strategic investor in the Stable venture.
Tether’s Position in Global Markets
While stablecoins seem poised for wider acceptance as payment methods in North America and Europe, Tether faces challenges in these markets due to regulatory hurdles. In the European Union, Tether has opted out of the Markets in Crypto Assets (MiCA) framework, which mandates that larger issuers maintain a significant portion of their fiat reserves in local bank accounts. In the U.S., two stablecoin legislative proposals would grant Tether a lengthy grace period but also impose obligations, including comprehensive third-party audits of its reserves, which Tether has yet to comply with independently. Tether CEO Paolo Ardoino has recently emphasized the company’s commitment to supporting emerging markets that desperately need stable financial solutions. He highlighted Bolivia, where prices in shops are increasingly displayed in USDT, showcasing the growing acceptance of stablecoins as a hedge against local currency depreciation.
Challenges in the Bolivian Market
Despite the potential of USDT in Bolivia, recent reports indicate that daily trading volumes for USDT in the country are limited to around $600,000, a small fraction compared to traditional finance volume, which ranges between $18-$22 million. Cash-based transactions in the black market are even higher, between $12-$14 million. The Bolivian central bank revealed that transactions using virtual asset payment channels reached $294 million in the first half of 2025, a staggering 530% increase compared to the previous year. These digital tools are enhancing access to foreign currency transactions, aiding micro and small businesses, and benefiting families across the nation.
Tether’s Stake in Juventus FC
As the leading stablecoin, Tether’s market cap reached a record $158.3 billion on July 2. However, this impressive figure has not translated into favorable relations with Juventus FC, a prominent team in Italy’s Serie A. In February, Tether announced it had acquired an 8.2% stake in the club, marking a notable first for a digital asset company in a major European football organization. By March, Tether’s stake had risen to over 10%, representing a significant financial commitment of around €128 million. Yet, complications arose when Ardoino expressed disappointment over Tether’s exclusion from a recent capital increase by Juventus and the limited communication with the club’s majority owners, the Agnelli family. Reports indicate that Juventus plans to meet with Tether executives after the current season concludes to evaluate their partnership, raising questions about the potential impact on the club’s image.
