Stablecoin powerhouse Tether has agreed to fork over $299.5 million to the Celsius Network’s bankruptcy estate, putting an end to a heated dispute stemming from the crypto lender’s dramatic 2022 implosion. This settlement, announced by the Blockchain Recovery Investment Consortium (BRIC), resolves allegations that Tether improperly liquidated Bitcoin collateral tied to USDT loans, potentially setting a precedent for how stablecoin issuers handle distressed markets.
The Dispute Unpacked
The roots of this clash trace back to Celsius’s bankruptcy filing in July 2022, amid a wave of crypto failures that rocked the industry. Celsius accused Tether of selling off Bitcoin collateral when its price matched the debt value, wiping out the lender’s position and accelerating its downfall. Initially, Celsius sought a whopping $4 billion in damages through a lawsuit filed in August 2024, but the $299.5 million deal represents a compromise that’s still a significant win for creditors.
Broader Implications for Crypto
This payout could reshape the landscape for stablecoin providers like Tether, who have long argued their role is purely transactional—issuing and redeeming tokens without liability for how they’re used in lending or DeFi. Experts suggest it highlights growing legal risks in volatile crypto environments, especially as regulators scrutinize the sector post-2022 meltdowns.
Echoes of the 2022 Crypto Crash
Celsius’s collapse was part of a domino effect, including bankruptcies at BlockFi, Voyager Digital, and Genesis Global Capital, with customers yanking nearly $13 billion from platforms between May and November 2022. High-yield products promising over 17% interest lured investors but proved unsustainable. Former Celsius CEO Alex Mashinsky, now serving a 12-year prison sentence, embodies the personal toll of these failures.