US Court Advances Celsius Lawsuit Against Tether Over $4 Billion Bitcoin Liquidation

A critical legal dispute between Celsius Network and Tether is gaining traction in a US bankruptcy court, drawing attention to how offshore crypto firms may be held accountable under American law. The judge recently ruled that Celsius can move forward with its lawsuit against Tether, centered on the controversial liquidation of nearly $4 billion in Bitcoin during Celsius’s financial collapse in mid-2022.

Tether had attempted to dismiss the case by asserting that it falls outside the jurisdiction of US courts due to its operations being based in the British Virgin Islands and Hong Kong. However, the judge rejected this argument, citing the company's substantial engagement with US-based staff, banking channels, and communication systems during its interactions with Celsius.

At issue is Tether’s alleged sale of 39,500 BTC at an average price of $20,656—executed without giving Celsius the 10-hour advance notice stipulated in their contract. Celsius claims this move, made during extreme market volatility, caused significant financial damage, with current Bitcoin valuations placing the potential loss above $4 billion.

The lawsuit also accuses Tether of transferring the proceeds to Bitfinex, a closely affiliated entity, raising red flags about internal governance and related-party dealings.

While some secondary claims were dismissed, the court preserved Celsius’s central arguments: breach of contract, fraudulent transfer, and preferential treatment of creditors. These allegations could reshape expectations for how crypto lending platforms and stablecoin issuers manage client assets, particularly in times of crisis.

Legal observers believe the outcome may influence the future regulatory framework for stablecoins and cross-border crypto lenders. A ruling against Tether could increase pressure for stricter controls on liquidation practices and reinforce the legal reach of US bankruptcy law.

Despite the mounting legal pressures, Tether continues to expand. It recently acquired a controlling stake in Twenty One Capital and moved over 37,000 BTC—worth nearly $4 billion—to addresses tied to its trading operations. The company remains one of the largest holders of Bitcoin globally.

Meanwhile, speculation persists about a potential Tether IPO, fueled by rumored valuations nearing $500 billion. CEO Paolo Ardoino has denied any current plans to go public.

As the Celsius lawsuit progresses, the crypto industry will be watching closely. The case may determine how offshore players engage with US-regulated entities and what safeguards must be in place to protect asset integrity during periods of financial instability.