If the Tether stablecoin adopted an animal character, it should be a cat since it appears to have nine lives. On Friday Celsius, the bankrupt crypto lender, sued Tether over alleged preferential treatment during its bankruptcy. Celsius had borrowed $812 million from Tether, but the stablecoin firm held collateral. Hence, shortly before the bankruptcy Tether liquidated collateral to settle the debt. If Celsius had brought the lawsuit two years ago, it could have been potentially far more serious for Tether.
Celsius alleges that it transferred 17,886 Bitcoin as collateral during the ninety day period prior to its bankruptcy. Legally, these sorts of transactions are often set aside because they give the recipient preference over other general creditors. Celsius’ retail clients received around 18% of the cryptocurrency that the company owed them. [Taking the dollar value of the crypto at the point of bankruptcy, the recovery percentage was far higher.]
The lawsuit contains additional allegations, including a claim that Tether liquidated Bitcoin collateral without waiting as contractually obliged. Celsius claims that if Tether had held off from liquidating the collateral, Celsius would have Bitcoin worth more than $2 billion at current prices.
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