Tether Settles Celsius Dispute for $299.5M

Tether News

Stablecoin issuer Tether has paid $299.5 million to resolve bankruptcy claims from Celsius Network, concluding a year-long legal battle over allegedly improper Bitcoin liquidations. The settlement represents roughly 7% of the $4.3 billion Celsius originally pursued in court.

The Blockchain Recovery Investment Consortium announced the agreement Monday, marking a major resolution in one of the largest remaining disputes from Celsius's three-year bankruptcy saga. BRIC, a partnership between VanEck and GXD Labs, manages complex asset recovery for the collapsed crypto lender.

Celsius had accused Tether of liquidating approximately 39,542 Bitcoin before the expiration of a required 10-hour waiting period in 2022. The adversary proceeding, filed in August 2024 in the U.S. Bankruptcy Court for the Southern District of New York, alleged Tether destroyed Celsius's residual interest by failing to provide contractually mandated notice.

Tether previously maintained that it acted lawfully under a 2022 agreement requiring Celsius to post additional collateral when Bitcoin prices declined. When the crypto lender failed to meet margin requirements, Tether liquidated the Bitcoin at Celsius's direction to cover an $815 million debt, according to company statements.

In July, Judge Martin Glenn ruled the lawsuit could proceed with the majority of Celsius's claims intact. The decision cleared the path for settlement negotiations that ultimately concluded with the deal, far below the nearly $4.5 billion in Bitcoin value at stake.

Tether CEO Paolo Ardoino confirmed on X that the company settled all issues related to the Celsius bankruptcy. GXD Labs Managing Partner David Proman expressed satisfaction with both the resolution and the timeliness of the settlement achievement.

BRIC was established in early 2023 specifically to maximize asset recovery in complex crypto bankruptcy cases. Following Celsius's emergence from bankruptcy protection in November 2023, the consortium was appointed as complex asset recovery manager and litigation administrator by debtors and the unsecured creditors' committee.

Celsius filed for bankruptcy in July 2022 after revealing a $1.2 billion balance-sheet shortfall. Former CEO Alex Mashinsky received a 12-year prison sentence in May after pleading guilty to commodities fraud and manipulating the price of Celsius's native $CEL token, with prosecutors stating he orchestrated one of the biggest frauds in the crypto industry.

In June, Mashinsky forfeited rights to any claims from the bankruptcy proceedings. BRIC continues to oversee a portfolio of illiquid and litigation assets for the Celsius estate during its wind-down phase, working to benefit creditors through recovery efforts.