A U.S. bankruptcy judge has allowed the Celsius lawsuit against Tether to continue. The case accuses Tether of breaching contract terms during a Bitcoin fire sale in June 2022.
Celsius claims that Tether liquidated 39,500 BTC without waiting the required 10-hour period and applied the funds toward an $812 million debt.
According to the filing, the Tether Bitcoin liquidation occurred at an average price of $20,656 per BTC, below market rates.
Celsius says the rushed sale led to over $4 billion in losses based on current prices. The complaint also alleges that Tether transferred the proceeds to Bitfinex wallets it controlled.
Judge Confirms US Jurisdiction Over Tether
Tether argued the case should be dismissed because it operates out of the British Virgin Islands and Hong Kong.
However, the judge ruled that Tether used U.S.-based financial accounts, personnel, and communication systems, giving U.S. courts jurisdiction.
The judge allowed three claims to proceed: breach of contract, fraudulent transfer, and preferential treatment.
Other minor counts were dismissed. The decision means Tether must respond to allegations it gained improper financial advantage during Celsius’s collapse.
Tether had sought full dismissal in August 2024, arguing that U.S. bankruptcy laws did not apply and that Celsius failed to present a valid claim.
Celsius Bankruptcy Case Continues in Court
Celsius, once a major crypto lending platform, filed for bankruptcy in July 2022. It completed an 18-month restructuring in January 2024.
The Celsius bankruptcy case includes ongoing efforts to recover lost funds and settle with creditors.
As part of that process, the court will now examine whether Tether’s liquidation actions violated contractual agreements and gave it priority over other creditors.
Celsius argues that these actions fall under avoidable transfers in U.S. bankruptcy law.
Tether Bitcoin Holdings Expand Amid Legal Scrutiny
While facing legal pressure, Tether has increased its presence in the Bitcoin market.
The company recently moved 37,230 BTC, valued around $3.9 billion, to addresses linked to Twenty One Capital, a firm owned by Jack Mallers. This places Tether among the largest corporate Bitcoin holders.
The lawsuit also references Tether Bitfinex wallets, which received funds from the BTC liquidation. Celsius claims these transfers raise concerns under bankruptcy law about fair distribution of assets.
Tether IPO News Addressed by CEO Ardoino
In June, Tether CEO Paolo Ardoino responded to reports about a potential Tether IPO.
He said there are “no plans” to take the company public, despite suggestions it could be valued at more than $500 billion.
Ardoino commented on that number, calling it “beautiful”, but noted that even this estimate may not reflect the company’s Bitcoin and gold reserves.
The statement clarified the company’s current stance but did not confirm future intentions.
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