A US Judge who deals with bankruptcy-related cases has partially waved a green light for Celsius Network over its lawsuit against stablecoin issuer Tether. According to a memorandum opinion and order signed on June 30, the judge declared that some parts of the complaint filed by Celsius Network are allowed to move forward, whereas other parts are denied. The reason for the partial dismissal is due to a lack of legal merit.
Why did Celsius Network file a lawsuit against Tether?
Celsius network took a loan from Tether, the company behind the stablecoin USDT, by keeping 39,500 Bitcoin as collateral. In June 2022, when the crypto market experienced a huge fall, Tether inappropriately liquidated 39,500 Bitcoin, according to the lawsuit submitted by Celsius Network. Celsius executives claimed that Tether sold the Bitcoin at a low price in a quick “fire sale”. The contract between both parties read that 10 hours is required before liquidating; however, Tether violated the rule, as alleged by Celsius. And, the US judge agreed with this part of the lawsuit.
Celsius also said that the rushed “fire sale” caused it to lose Bitcoin that is now worth more than $4 billion. Meanwhile, Tether argued that it retaliated against the allegation, calling it invalid and arguing the court had no jurisdiction.
How did Celsius go bankrupt?
Celsius filed for bankruptcy in July 2022 following internal mismanagement and the then-market collapse effect. This failure is considered one of the biggest bankruptcies in the history of crypto, leaving $4.7 billion in user assets locked on the network. The US Department of Justice (DOJ) issued a 20-year of imprisonment for the former CEO of Celsius, Alex Mashinsky, noting a “years-long campaign of lies and self-dealing”.
Last month, a US Judge denied the former executive from receiving any payout from the ongoing bankruptcy case and all financial claims he earlier put forward.
