In a significant development within the cryptocurrency sector, Tether has settled claims related to the bankruptcy of Celsius Network by paying $299.5 million. This sum is remarkably less than the nearly $4.5 billion in Bitcoin that Celsius initially sought to recover. The payment comes in the wake of a lawsuit filed by Celsius, which accused Tether of improperly liquidating over 39,000 Bitcoins without proper notice prior to Celsius’s bankruptcy declaration in July 2022.
Tether has refuted these claims, asserting that it acted in compliance with a 2022 agreement with Celsius, which required the crypto lender to provide additional collateral when Bitcoin values fell. When Celsius failed to meet these margin requirements, Tether stated that it liquidated the Bitcoins at Celsius’s direction to address an $815 million debt.
Celsius contended that Tether did not honor a contractual obligation to provide a 10-hour notice before proceeding with the liquidation, thereby affecting Celsius’s residual interest in the collateral. Following this dispute, a federal judge ruled in July that the lawsuit could continue.
On social media, Tether’s CEO, Paolo Ardoino, confirmed the settlement of “all issues” concerning the Celsius bankruptcy case. While inquiries about the specific settlement figure have not been immediately answered, Ardoino expressed satisfaction in reaching this agreement.
The Blockchain Recovery Investment Consortium (BRIC), formed between investment firms GXD Labs and VanEck, played a pivotal role in facilitating this settlement. David Proman, Managing Partner at GXD Labs, stated that the organization is pleased with the prompt resolution of the adversary proceeding and related claims against Tether.
This settlement occurs as BRIC continues its efforts to manage complex bankruptcy cases within the cryptocurrency space. In January 2024, after Celsius emerged from bankruptcy protection, BRIC was appointed as the manager for complex asset recovery and litigation activities for the Celsius estate. Its ongoing responsibilities include supervising a portfolio of illiquid and litigation assets, with the goal of maximizing benefits for creditors during the estate’s wind-down phase.
In a related development, Alex Mashinsky, the co-founder and former CEO of Celsius, was sentenced to 12 years in prison for securities and commodities fraud. He faced charges for mismanaging customer funds and manipulating the price of Celsius’s CEL token. In June, he relinquished any rights to claims emerging from the bankruptcy proceedings.
As the fallout from the Celsius collapse continues, both Tether and BRIC remain engaged in efforts to resolve the complexities associated with the cryptocurrency firm’s bankruptcy.
