Judge Allows Celsius’s $4B Bitcoin Lawsuit Against Tether to Proceed

A U.S. bankruptcy judge has ruled that Celsius Network’s lawsuit against Tether can move forward, rejecting key parts of Tether’s bid to dismiss the case.

The legal battle centers on Tether’s liquidation of more than 39,500 Bitcoin during Celsius’s collapse in June 2022, which the crypto lender alleges violated a lending agreement and cost it over $4 billion at current prices.

Celsius claims Tether conducted a rushed “fire sale” of the Bitcoin collateral, liquidating the assets at an average price of $20,656 — below market value — and transferred the proceeds to its own Bitfinex accounts. The firm says Tether failed to honor a 10-hour margin call waiting period, constituting a breach of contract, bad faith dealings under British Virgin Islands law, and fraudulent transfers under U.S. bankruptcy code.

While Tether sought a full dismissal, arguing a lack of U.S. jurisdiction due to its offshore incorporation, the judge found Celsius had made a “plausible” case that the alleged misconduct was “domestic in nature.”

Some claims were dismissed, but Celsius’s core allegations — including breach of contract and fraudulent transfers — will proceed.

The ruling is a blow to Tether, which has faced growing legal scrutiny in recent months despite expanding its Bitcoin footprint. In June, CEO Paolo Ardoino said the company had no plans to pursue an IPO, though market speculation valued Tether at over $500 billion.

Celsius, once a top crypto lending platform, exited bankruptcy in January 2024 and has since resumed creditor repayments.