Tether Settles $300M Celsius Lawsuit in Bankruptcy Case

The Blockchain Recovery Investment Consortium (BRIC), a partnership between GXD Labs and VanEck, announced on Tuesday that Tether (USDT) has agreed to pay a substantial amount to Celsius’s bankruptcy estate, resolving an adversary proceeding initiated last year. This settlement marks a pivotal moment in the legal saga surrounding Celsius, which filed for bankruptcy in July 2022, and represents one of the largest third-party claims in the case.

Celsius had previously accused Tether of mishandling collateral and liquidations, claiming damages involving 39,542 BTC (approximately $4.3 billion at the time) along with an additional $100 million. The crypto lender asserted that Tether’s actions exemplified a broader “scheme to exploit the US cryptocurrency market,” a position they believed could support jurisdiction in the case. This massive claim highlighted the significant stakes involved in the dispute between the two major crypto entities.

In response to Celsius’s allegations, Tether characterized the lawsuit as a “shake down” and maintained that Celsius was responsible for providing additional collateral in light of fluctuating Bitcoin prices at the time. The stablecoin issuer argued that Celsius’s mismanagement should not result in undue costs for them, creating a stark contrast in legal positions between the two parties.

The dispute centered around fundamental questions of responsibility in crypto lending relationships, particularly regarding collateral management during periods of market volatility. Celsius’s claim that Tether’s actions represented a broader market exploitation scheme added regulatory and industry-wide implications to what might otherwise have been a straightforward contractual dispute.

Ultimately, the settlement allows Tether to resolve the matter for approximately $300 million, a fraction of the initial $4.4 billion claimed by Celsius. This resolution provides a notable return for creditors involved in the bankruptcy proceedings, representing a significant recovery in a case that has seen substantial losses for Celsius customers and investors.

The nearly $300 million recovery through this settlement demonstrates the effectiveness of the bankruptcy process in maximizing returns for creditors, even when dealing with complex crypto-related claims. For Celsius creditors who have been waiting for resolution since the July 2022 bankruptcy filing, this settlement represents tangible progress toward recovering their investments.

Tether CEO Paolo Ardoino commented on the settlement via social media platform X (formerly Twitter), stating, “Tether is pleased to have reached a settlement of all issues related to the Celsius bankruptcy.” This public statement reflects the company’s satisfaction with resolving the contentious legal matter and moving past the dispute.

David Proman, Managing Partner of GXD Labs, which partners with VanEck in the Blockchain Recovery Investment Consortium (BRIC), also expressed satisfaction with the resolution. “We are pleased to have resolved Celsius’s adversary proceeding and related claims against Tether,” he stated, indicating the collaborative effort between the involved parties in reaching this settlement.

The resolution of this major claim through the BRIC partnership highlights the growing sophistication of recovery mechanisms in the crypto bankruptcy space. As the industry continues to mature, such settlements demonstrate that traditional legal frameworks can be effectively applied to resolve complex crypto disputes, providing precedent for future cases involving digital asset bankruptcies and creditor recoveries.