Tether Settles Celsius Bankruptcy Claims for $299.5M

The settlement between Tether and the Celsius Network bankruptcy estate resolves what had become one of the most contentious claims in the crypto lending platform’s collapse. Celsius had sought to recover approximately 39,542 Bitcoin—valued at nearly $4.5 billion at current prices—alleging that Tether improperly liquidated the Bitcoin collateral ahead of Celsius’s July 2022 bankruptcy filing. The $299.5 million payment represents a dramatic reduction from the original claim, amounting to just 6.7% of what Celsius initially pursued.

The legal dispute centered on conflicting interpretations of a 2022 agreement between the two companies. Tether maintained it acted lawfully under the agreement, which required Celsius to post additional collateral when Bitcoin prices dropped. When Celsius failed to meet margin requirements, Tether stated it liquidated the Bitcoin at Celsius’s direction to cover an $815 million debt. Celsius countered that Tether failed to provide the contractually required 10-hour window to deposit additional collateral before liquidating the Bitcoin, thereby destroying Celsius’s residual interest in the assets.

Tether CEO Paolo Ardoino confirmed the settlement in an X post, stating the company had resolved “all issues” regarding the Celsius bankruptcy suit. The payment resolves an adversary proceeding filed in August 2024 in the U.S. Bankruptcy Court for the Southern District of New York, bringing closure to a legal battle that had been allowed to continue by a federal judge’s ruling in July.

The Blockchain Recovery Investment Consortium (BRIC), a partnership between investment firms GXD Labs and VanEck, played a central role in facilitating the settlement. Established in early 2023 specifically to maximize asset recovery in complex crypto bankruptcy cases, BRIC was appointed in January 2024 as complex asset recovery manager and litigation administrator by the debtors and unsecured creditors’ committee following Celsius’s emergence from bankruptcy protection.

GXD Labs Managing Partner David Proman expressed satisfaction with the resolution, stating: “We are pleased to have resolved Celsius’s adversary proceeding and related claims against Tether. In addition, we are pleased with the timeliness with which the settlement was achieved.” The consortium continues overseeing a portfolio of illiquid and litigation assets for the Celsius estate during its wind-down phase, working to maximize returns for creditors affected by the platform’s collapse.

BRIC’s involvement highlights the growing specialization required to navigate the complex web of claims and counterclaims in major crypto bankruptcies. The consortium’s mandate extends beyond the Tether settlement to managing various illiquid assets and ongoing litigation matters, representing a structured approach to recovering value in one of the industry’s most challenging bankruptcy scenarios.

Separate from the Tether settlement, former Celsius Network CEO Alex Mashinsky received a 12-year prison sentence in May for securities and commodities fraud charges. The sentencing followed convictions for misusing customer funds and manipulating the price of Celsius’s native CEL token, representing one of the most significant criminal penalties handed down in the crypto industry to date.

In a further development, Mashinsky forfeited his rights to any claims from the Celsius bankruptcy proceedings in June. This forfeiture prevents the former executive from participating in any distribution of recovered assets to creditors, ensuring that whatever value can be salvaged from the bankruptcy estate flows to the customers and creditors harmed by the platform’s collapse rather than to its disgraced founder.

The combination of Mashinsky’s criminal sentencing and the Tether settlement represents significant milestones in the winding down of Celsius Network. While creditors continue to face substantial losses, these developments provide some measure of accountability and recovery in a case that has come to symbolize the risks and regulatory challenges within the crypto lending sector.