The crypto world never stops surprising me. Just when I thought things were kind of quietening down, Celsius files a lawsuit against Tether. The feeling is like that of two heavyweights duking it out in the ring.
Celsius, the crypto lender that went belly up in 2022, now points an accusing finger at Tether, saying they wrongfully liquidated more than $800 million worth of Bitcoin. That is a lot of scratch, considering even crypto standards. Yeah, I remember when Celsius declared bankruptcy, it was quite the event at the time within the community of crypto traders. Now, here it is, two years down the line, trying to recover from its losses.
The whole situation is based on a loan agreement that Celsius made with Tether as far back as 2020. Celsius borrowed USDT and EURT stablecoins from Tether and provided Bitcoin to back up the collateral.
Well, it seemed to be a good deal at the time;, however, we all know how crypto can get sometimes. Then things got really messy when the price of Bitcoin nosedived in mid-2022.
According to Celsius, they did shift more Bitcoin to Tether as additional collateral. But they claim Tether didn't play nice. According to Celsius, they were supposed to have ten hours to add more collateral, but Tether jumped the gun and liquidated everything before the deadline. If that is true, that is pretty low.
But Tether isn't going to take these accusations lying down. CEO Paolo Ardoino shot back to call the lawsuit a "baseless shakedown." He argues it was Celsius that instructed Tether to sell the Bitcoin when prices dropped. It's a classic case of he-said, she-said, and I'm not sure who to believe.
What's interesting, is how Tether is dealing with it. They're very confident about winning the case and reassuring their token holders not to get affected by this controversy. Having $12 billion in equity should put them pretty well on the safe side for any kind of legal trouble.
This entire saga reminds me of why I am both fascinated and cautious about the crypto world. It's like the Wild West sometimes, exciting, but you've got to watch your back. I learned that things in crypto can change in the blink of a second, and yesterday's partners easily become today's adversaries.
I'm not taking any sides, but oh boy, will I love to see how this one plays out. Will Celsius regain some of the funds, or is Tether going to come out on top?
Either way, it's going to have some broad repercussions throughout the cryptocurrency ecosystem.
I hope this case brings more clarity to the crypto lending sector. We need clearer rules and better safeguards to protect the lenders and the borrowers. Perhaps this lawsuit will serve as a wake-up call for the industry.