Tether Limited has strongly hit back at the lawsuit filed by Celsius Network, calling the suit “without merit” and saying it will vigorously defend itself in court. The lawsuit, filed on August 9 in the U.S. Bankruptcy Court for the Southern District of New York, seeks to recover approximately $2.4 billion worth of Bitcoin that it claims was improperly liquidated by Tether before Celsius went bankrupt. Tether, for its part, maintains that it acted in accordance with the terms of the parties’ 2022 agreement, which required Celsius to post additional Bitcoin as collateral when Bitcoin prices fell. Tether says that when Celsius failed to meet those requirements, it was Celsius itself that instructed Tether to liquidate Bitcoin to repay $815 million in debt.

Tether also questioned the legal basis of the lawsuit, pointing to “clear legal misapplication” on Celsius’ part and expressing concerns about jurisdiction. Tether assured investors that its financial position remains strong despite the lawsuit, with consolidated equity of $12 billion as of June 30, 2024. Celsius claims that Tether did not provide the contractually agreed 10-hour time frame to pay deposits after receiving the final demand for collateral. The cryptocurrency lender filed for Chapter 11 bankruptcy protection in July 2022, arguing that Tether's actions impaired Celsius's remaining interest in the collateral, which Celsius claimed was $2.4 billion based on Bitcoin's current market price.

Celsius's collapse was seen as one of the major financial events of 2022, leaving it insolvent with $5.5 billion in liabilities and $1.2 billion more assets than liabilities. Following Celsius' bankruptcy, its former CEO Alex Mashinsky faced federal criminal charges and civil lawsuits. Late last year, Celsius' creditors approved a $2 billion restructuring plan aimed at helping the company emerge from bankruptcy.