Tether, the stablecoin issuer, has consented to pay $299.5 million to the Celsius Network bankruptcy estate, resolving years of legal disputes related to the crypto lender’s collapse in 2022.
This amount is significantly less than the approximately $4.5 billion Celsius initially sought in bitcoin.
The Blockchain Recovery Investment Consortium (BRIC)—a collaboration between VanEck and GXD Labs—declared the settlement on Tuesday, stating it resolves “all matters” between Tether and the Celsius estate.
“We are glad to have settled Celsius’s adversary proceeding and related claims against Tether,” commented David Proman, managing partner at GXD Labs.
Tether and the Celsius Collapse
The settlement brings closure to one of the most heated cases in cryptocurrency bankruptcy history. Celsius filed a lawsuit against Tether in August 2024, alleging that the stablecoin issuer unjustly liquidated around 39,500 Bitcoin that was used as collateral before Celsius declared bankruptcy in July 2022.
Celsius claimed that Tether breached an agreement that required a 10-hour notification before selling the assets, which led to the loss of any remaining equity in the position.
Tether countered, branding the lawsuit as a “groundless extortion.” The company maintained that it operated in accordance with a 2022 agreement which required Celsius to provide additional collateral as Bitcoin prices dropped.
When Celsius failed to fulfill the margin call, Tether asserted that it liquidated the bitcoin under Celsius’s directions to settle an $815 million obligation.
A U.S. bankruptcy judge in New York permitted the progression of Celsius’s case earlier this year, although Tether denied any wrongdoing.
The $299.5 million payment was facilitated through BRIC, a joint recovery initiative established in early 2023 to pursue claims and recover assets from failed crypto firms.
BRIC was appointed by the Celsius debtor and creditors’ committee in January 2024 to manage asset recovery and litigation, as reported in the BRIC announcement.
While this payment is a positive outcome for Celsius creditors, it remains a modest sum in light of the extensive losses stemming from the company’s downfall.
Celsius, which was once among the largest crypto lenders, halted withdrawals in mid-2022 due to plummeting token prices and unprofitable investments. Its bankruptcy uncovered billions in customer losses and alleged poor management by senior executives.
Former Celsius CEO Alex Mashinsky was sentenced to 12 years in prison for fraud and market manipulation in May. Prosecutors asserted that he misappropriated customer funds and artificially inflated the value of the CEL token. In June, Mashinsky consented to relinquish any claims to assets from the bankruptcy estate.
The collapse of Celsius emerged as one of the pivotal events of the cryptocurrency credit crisis in 2022, alongside the failures of Voyager, BlockFi, and FTX.
The aftermath sparked a surge of litigation and recovery efforts, continuously transforming how courts handle crypto lending and collateral agreements.
