A US bankruptcy judge has ruled that Celsius Network's multibillion-dollar lawsuit against Tether can proceed, denying in part Tether's attempt to dismiss claims that it “improperly” liquidated Celsius's Bitcoin collateral during the crypto lender's collapse . According to court documents filed in New York on Monday, Celsius alleges that Tether executed a “fire sale” of over 39,500 Bitcoin in June 2022, applying the proceeds against Celsius's $812 million debt without following agreed-upon procedures .
Celsius claims Tether's actions breached their lending agreement, violated “good faith and fair dealing” under British Virgin Islands law, and constituted fraudulent and preferential transfers avoidable under the US Bankruptcy Code . The complaint centers on a margin call Tether issued as Bitcoin prices plunged . Celsius argues that Tether sold its collateral before a 10-hour waiting period, liquidating the BTC at an average price of $20,656 (below market levels) and later transferring the assets to its own Bitfinex accounts .
The judge agreed Celsius made a plausible case that the transfers and alleged misconduct were “domestic” in nature, rejecting Tether's argument that the claims represent an impermissible extraterritorial application of US bankruptcy law . Celsius further claims Tether's actions involved US-based communications, personnel and financial accounts, establishing sufficient ties for US jurisdiction despite Tether's incorporation in the British Virgin Islands and Hong Kong .
Celsius's lawsuit claims that Tether's liquidation cost Celsius over $4 billion worth of BTC at current prices . The court ruling highlights significant legal scrutiny over Tether's handling of Celsius's Bitcoin assets, emphasizing jurisdictional ties to the US despite Tether's offshore incorporation . The ongoing litigation between Celsius Network and Tether centers on allegations that Tether conducted a premature and undervalued “fire sale” of approximately 39,500 Bitcoin in June 2022, during a critical margin call triggered by plunging BTC prices .
Celsius claims this liquidation breached their lending agreement and violated principles of good faith under British Virgin Islands law, while also constituting fraudulent and preferential transfers under US Bankruptcy Code provisions . This lawsuit not only questions the procedural integrity of Tether's actions but also raises important jurisdictional issues . Despite Tether's incorporation in the British Virgin Islands and Hong Kong, the court found sufficient US-based communications and financial activities to assert jurisdiction . This sets a precedent for how cross-border crypto disputes may be adjudicated, particularly when US financial systems and personnel are involved .
The judge's rejection of Tether's extraterritoriality defense marks a critical development in crypto law . By affirming that the alleged misconduct was “domestic” in nature, the court opened the door for US bankruptcy laws to apply to international crypto entities operating within or interacting with the US financial ecosystem . This decision could influence future cases involving...