Tether, the issuer of the USDT stablecoin, has reached a settlement with the Celsius Network bankruptcy estate, agreeing to pay $299.5 million to resolve claims stemming from the crypto lender's collapse in 2022. The settlement, announced on Tuesday by the Blockchain Recovery Investment Consortium (BRIC), concludes a protracted legal battle over Bitcoin (BTC) collateral transfers and liquidations that preceded Celsius's downfall. BRIC, a partnership between VanEck and GXD Labs, was appointed to manage asset recovery and litigation for Celsius after the company emerged from bankruptcy protection in January 2024.
Celsius had initially sued Tether, alleging that the stablecoin issuer improperly liquidated Bitcoin collateral securing loans denominated in USDT. The complaint stated that Tether sold the collateral when Bitcoin's price closely matched the value of Celsius's debt, effectively eliminating Celsius's position and contributing to its insolvency. Celsius claimed that Tether prematurely liquidated 39,542 BTC in 2022, violating a 10-hour grace period stipulated in their loan agreement. They sought $4.3 billion in damages, along with an additional $100 million, constituting their largest third-party claim.
Tether had refuted these allegations, characterizing the lawsuit as a "baseless shakedown". The company maintained that Celsius was responsible for providing additional collateral due to fluctuating Bitcoin prices at the time and that Celsius's mismanagement should not result in undue costs for them. Tether argued that it acted lawfully under a 2022 agreement requiring Celsius to post collateral.
The $299.5 million settlement represents a fraction of the approximately $4.3 billion Celsius sought in court. Despite the lower amount, the settlement provides a significant return for creditors involved in the bankruptcy proceedings. Tether CEO Paolo Ardoino commented on social media, stating, "Tether is pleased to have reached a settlement of all issues related to the Celsius bankruptcy". David Proman, Managing Partner of GXD Labs, also expressed satisfaction with the resolution.
The resolution of this dispute has significant implications for the stablecoin industry. The case highlights the potential legal exposure for stablecoin issuers when acting as counterparties in distressed crypto markets. It may also influence how regulators and courts view the responsibilities of entities like Tether in future insolvencies. The settlement underscores systemic risks in stablecoin collateral management and signals a broader shift toward regulatory clarity.
The Tether-Celsius legal dispute has become a pivotal case study for assessing the long-term resilience of stablecoins. For investors, the case raises critical questions about the durability of stablecoin pegs, the enforceability of contractual terms in crypto lending, and the evolving role of legal frameworks in mitigating systemic instability. Concerns remain about fragile investor confidence in stablecoins, demanding global coordination to prevent systemic risks and capital flight.
The settlement comes amidst increasing regulatory scrutiny of stablecoins. Post-2025 regulations, such as the U.S. GENIUS Act and EU MiCA, mandate stricter stablecoin reserves, transparency, and redemption rights. Tether's new USA₮ stablecoin aims to comply with these rules, signaling an industry shift toward regulatory alignment and structural trust.
