Celsius had filed a lawsuit, accusing the stablecoin issuer of improperly liquidating bitcoins that served as collateral for USDT-denominated loans.
Stablecoin issuer Tether has reached a $299.5 million out-of-court settlement with the bankruptcy administration of Celsius Network, bringing an end to a legal dispute stemming from the collapse of the crypto lending platform in 2022.
The Blockchain Recovery Investment Consortium (BRIC) – a joint venture between asset manager VanEck and GXD Labs, an affiliate of Atlas Grove Partners – announced the transaction on October 14. The settlement ends a years-long dispute over bitcoin collateral transfers and liquidations that occurred prior to Celsius’s bankruptcy in July 2022.
BRIC was established in early 2023 to maximize recovery of claims from failed digital asset platforms. In January 2024, following Celsius’s exit from bankruptcy protection, BRIC was appointed as the asset recovery manager and litigation administrator by Celsius debtors and the committee of ordinary creditors.
The Tether vs. Celsius lawsuit
Celsius had previously sued Tether, claiming that the stablecoin issuer had improperly liquidated bitcoin collateral securing USDT loans. According to the complaint, Tether sold the collateral when the bitcoin price was very close to the value of Celsius’s debt, wiping out the platform’s position and contributing to its insolvency.
Tether had maintained that it acted legally under a 2022 agreement, which required Celsius to provide additional collateral when bitcoin prices fell. When the lending company failed to meet margin requirements, Tether stated that it liquidated the bitcoins at Celsius’s direction to cover an $815 million debt. Celsius countered, arguing that Tether had failed to honor the contractual 10-hour window to deposit additional collateral before liquidating the bitcoins, thereby destroying Celsius’s residual interest.
The newly announced settlement represents only a fraction of the approximately $4.5 billion in damages that Celsius had sought in court following proceedings initiated in August 2024.
The collapse of Celsius Network
Celsius Network’s bankruptcy was part of a cascade of collapses in 2022 that contributed to a prolonged bear market, ultimately setting the stage for the FTX collapse later that year.
The consequences were particularly severe for former Celsius CEO Alex Mashinsky, who agreed last June not to claim any assets from the company’s bankruptcy administration and was subsequently sentenced to 12 years in prison on two felony counts. Mashinsky reported to prison in September.
Celsius was not the only victim. Major crypto lending platforms BlockFi and Voyager Digital filed for bankruptcy protection in 2022, followed by Genesis Global Capital the following year.
