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- Celsius can continue with its $4 billion lawsuit against Tether.
- The dispute centers on the rushed liquidation of 39,500 Bitcoin in 2022.
- Celsius has returned most of the funds to its users but still faces legal challenges.
A U.S. bankruptcy judge has ruled that Celsius Network may push forward with its $4 billion lawsuit against Tether. The dispute began when Celsius accused the stablecoin issuer of violating loan contract terms by selling 39,500 Bitcoin too quickly during the crypto market crash of 2022.
Tether is said to have disregarded a required 10-hour waiting period before selling the assets that were kept as collateral against a loan of $812 million. The lawsuit was filed by Celsius in August 2024. The company claimed that the hasty sale damaged its stance and breached major contractual protections.
The Bitcoins that were sold are currently valued at approximately $4 billion today. Tether had itself asserted that its moves were reasonable and that Celsius’s case is meritless. Even then, the judge ruled that the main claims should have a full hearing in court.
Certain minute details of the suit were struck off, though. These were foreign law claims involving Tether’s off-shore unit that is based in the British Virgin Islands. Those positions were denied by the judge as having no jurisdiction in U.S. law.
Celsius Repays 93% of Funds in Recovery Plan
Despite the collapse into bankruptcy in July 2022 in the midst of the crypto winter, Celsius is now repaying customers. The firm began repaying its clients in early 2024 under its repayment plan for the bankrupt firm.
Until August 2024, it repaid a total sum of $2.5 billion to 251,000 creditors. That is around 93% of the total sum. However, not all affected users have retrieved their funds. Around 121,000 inactive creditors remain.
The majority are retail customers with modest accounts. The company is still assisting with outreach and claims administration. Even though the lawsuit with Tether is ongoing, Celsius appears to be bent upon reclaiming as much value as possible.
Celsius Still in Court Despite CEO’s Prison Sentence
Celsius’ meltdown did not stop at bankruptcy. In May, its former CEO Alex Mashinsky, was sentenced to 12 years in prison in May 2025. He already pleaded guilty to fraud, price manipulation, and lying to customers about the firm’s health.
Court filings showed that Mashinsky fooled the users while making gains totaling $42 million from overpriced tokens. The Mashinsky case became one of the strongest prosecutions ever within the crypto industry. What he did brought back memories to other failed platforms that promised large profits but delivered no stability.
Despite his sentencing closing the criminal case, civil lawsuits involving Celsius are yet to be determined. The case against Tether can serve as a guide for later cases involving cross-border crypto transactions. So far, Celsius and Tether are yet to see the direction the case will take next in the U.S. courts
In future, Celsius will likely finish repaying users as more claim their funds. If it wins the lawsuit against Tether, users might receive more. The company aims to close its recovery soon.
Related Reading: Bitcoin at $106,463: Will the Downward Momentum Continue or Rebound?
