Tether Settles Bankruptcy Claims with Celsius Network
Tether has agreed to a settlement of $299.5 million to address bankruptcy claims put forth by Celsius Network, effectively ending a year-long legal dispute concerning alleged improper liquidations of Bitcoin. This settlement amount is approximately 7% of the $4.3 billion that Celsius initially sought through legal channels.
Major Resolution in Celsius Network Bankruptcy Saga
The Blockchain Recovery Investment Consortium (BRIC) announced the settlement on Monday, highlighting a significant resolution in one of the most substantial ongoing disputes stemming from Celsius’s three-year bankruptcy proceedings. BRIC, which consists of VanEck and GXD Labs, specializes in managing intricate asset recoveries for the defunct cryptocurrency lender.
Celsius’s Allegations Against Tether
Celsius accused Tether of liquidating around 39,542 Bitcoin prematurely, violating a mandatory 10-hour waiting period in 2022. The adversary proceeding, initiated in August 2024 in the U.S. Bankruptcy Court for the Southern District of New York, claimed that Tether undermined Celsius’s remaining interests by neglecting to provide the contractually required notifications.
Tether’s Defense and Legal Developments
Tether has previously asserted that its actions were lawful under a 2022 agreement, which stipulated that Celsius must provide additional collateral when Bitcoin prices fell. When Celsius failed to meet these margin requirements, Tether liquidated the Bitcoin at Celsius’s request to settle an $815 million debt, according to the company’s statements.
Judicial Ruling Opens Path for Settlement
In July, Judge Martin Glenn determined that the lawsuit could proceed with most of Celsius’s claims intact. This ruling set the stage for negotiations that ultimately led to the settlement announced on Tuesday, which is significantly lower than the nearly $4.5 billion in Bitcoin value that was originally at stake.
Confirmation of Settlement from Tether and BRIC
Tether’s CEO, Paolo Ardoino, confirmed via X that the company has resolved all outstanding issues related to the Celsius bankruptcy. GXD Labs Managing Partner David Proman expressed satisfaction with both the outcome and the prompt nature of the settlement.
BRIC’s Role and Ongoing Efforts
Established in early 2023, BRIC was specifically created to enhance asset recovery in complicated cryptocurrency bankruptcy cases. After Celsius emerged from bankruptcy protection in November 2023, the consortium was appointed as the complex asset recovery manager and litigation administrator by the debtors and the unsecured creditors’ committee.
Celsius’s Bankruptcy and Legal Troubles
Celsius filed for bankruptcy in July 2022 after disclosing a $1.2 billion shortfall in its balance sheet. Former CEO Alex Mashinsky was sentenced to 12 years in prison in May after pleading guilty to commodities fraud and manipulating the price of Celsius’s native $CEL token, with prosecutors labeling his actions as one of the largest frauds within the crypto sector.
Current Oversight of Celsius’s Assets
In June, Mashinsky relinquished any rights to claims from the bankruptcy proceedings. BRIC continues to manage a portfolio of illiquid and litigation-related assets associated with the Celsius estate during its wind-down process, striving to optimize recovery efforts for creditors.
