In a major legal development shaking the crypto world, a U.S. judge has ruled that Celsius Network’s $4 billion lawsuit against Tether—the issuer of the USDT stablecoin—can proceed. At the heart of the case is a dispute over whether Tether acted unlawfully by liquidating billions of dollars in Bitcoin that Celsius had pledged as collateral shortly before its collapse in 2022.
The case, now entering its next legal phase, could set significant precedents for crypto lending, collateral management, and stablecoin regulation.
What Happened Between Celsius and Tether?
In mid-2022, Celsius Network, once a major crypto lending platform, was in financial freefall. As part of its operations, Celsius had borrowed stablecoins from Tether, putting up Bitcoin as collateral. But when the markets crashed and Celsius’s liquidity crisis deepened, Tether moved quickly to liquidate roughly $4 billion worth of that Bitcoin.
Celsius is now arguing that the liquidation was unjustified—or at least premature—and that Tether violated its contractual obligations by offloading the assets to protect its own position.
Tether, on the other hand, says it was well within its rights, acting to prevent further risk. The disagreement centers around whether the liquidation terms were clearly defined, and whether Celsius’s insolvency gave Tether a valid reason to act.
Why the Judge Let the Case Move Forward
Tether asked the court to dismiss the lawsuit entirely, but the judge declined to throw it out. While the court didn’t rule on who’s right or wrong, it found that Celsius’s claims were “plausible” enough to warrant further examination.
This means the case will now move into discovery, where both sides can dig into documents, emails, and internal communications to build their arguments. If it goes to trial, the ruling could shape how crypto lenders and borrowers operate going forward—especially when it comes to managing large amounts of collateral in volatile markets.
Why This Case Matters to the Broader Crypto Industry
This lawsuit isn’t just about two companies fighting over money. It could have wide-reaching implications for the entire crypto lending ecosystem.
Collateral Clarity: The outcome could set a legal standard for how and when lenders can liquidate digital assets.
Stablecoin Oversight: As Tether is the most widely used stablecoin issuer in the world, the case may trigger renewed scrutiny into how these firms operate and how transparent they are with reserves.
Legal Precedents: If Celsius wins, it may embolden other bankrupt or struggling firms to challenge how counterparties handled collateral during the 2022 crypto crash.
A Glimpse Into Celsius’s Downfall
Celsius’s collapse in 2022 was part of a broader wave of failures across the crypto sector. The firm had marketed itself as a safe place to earn high interest on crypto deposits, but when liquidity dried up, it froze withdrawals and filed for bankruptcy shortly after. Many of its users lost access to their funds.
The lawsuit against Tether is part of Celsius’s larger effort to recover funds for creditors and former users. If successful, it could help plug the massive financial hole left in the wake of its failure.
What Happens Next?
With the case officially moving forward, both Celsius and Tether will now prepare for the next phase: gathering evidence. This stage could take months, and a trial—if it happens—may not occur until 2025 or later.
Still, the fact that a judge found the allegations serious enough to examine further is notable in itself. The crypto world will be watching closely to see whether the courts ultimately side with Celsius’s accusations or uphold Tether’s defense.
A Legal Battle That Could Reshape Crypto Lending
The Celsius–Tether lawsuit may seem like a dispute between two companies, but it touches on some of the most important questions in crypto finance: Who controls collateral? What happens in a crisis? And how do we build trust in a system built on decentralization?
As the case unfolds, its outcomes could ripple far beyond these two firms—impacting how future crypto contracts are written, how stablecoin issuers behave, and how transparent the industry must become to avoid another round of collapses.
