Judge Approves Celsius $4B Lawsuit Against Tether

• Celsius lawsuit for $4B Bitcoin loss advances.
• Tether was accused of bad-faith Bitcoin liquidation.
• Court rejects Tether’s non-U.S. jurisdiction claim.

Celsius Network Limited has been granted permission to pursue a $4 billion lawsuit against Tether Limited by a bankruptcy court in the United States. The lawsuit, which was filed in the Southern District of New York, alleges that Tether wrongfully liquidated Bitcoin collateral in the course of Celsius in 2022. In a ruling, the court denied the motion to dismiss filed by Tether and believed the claims made by Celsius to be credible to continue.

The Blockchain Recovery Investment Consortium was the organization that first brought the legal case forward in August of 2024 with Celsius. The complaint alleges that Tether sold Bitcoin which was provided as collateral in a 2022 transaction. According to Celsius, based on the current price of Bitcoin, the corporation is over $4 billion in debt due to the liquidation. On July 2, 2025, the court ruled in favor of proceeding with the case, overriding jurisdictional challenges by Tether.

Allegations of Breach and Fraud

According to Celsius, Tether breached the contract by liquidating Bitcoin without any reasonable cause. The lawsuit notes that Tether’s actions involved U.S.-based communications and financial accounts, creating a sufficient connection to establish jurisdiction in the U.S. The court found Celsius’s claims of contract breach and potential fraud to be plausible. Specifically, Celsius claims that Tether liquidated assets in bad faith, causing significant financial damage. The decision is a major milestone for the company on its road to recouping significant losses experienced in its fall in 2022.

In an August 2024 statement, in response, Tether described the lawsuit as a baseless shakedown. Regardless of the defense provided by Tether, the court held that the evidence provided by Celsius was sufficient to pursue the case.

Implications for the Crypto Industry

The ruling has highlighted the legal issues of cryptocurrency contracts. Regulators such as the SEC and FTC have already investigated the bankruptcy of Celsius, which was declared under Chapter 11 in July 2022. The case is another event to the battles in the crypto industry.

Celsius based its allegations on a 2022 agreement in which Tether lent it USD 30 million worth of the USDT stablecoin, backed by Bitcoin collateral. Celsius was in a liquidity crisis when Tether sold the Bitcoin, and this was, according to Celsius, technically unwarranted and economically devastating. The case aims to recover the value of the liquidated assets, estimated at 4 billion dollars.

Next Steps in the Legal Battle

In the ruling of the court, discovery and additional arguments are possible. The two will put forward evidence to back up their claims and Celsius intends to show that what Tether did was not right. The case is still in the U.S. Bankruptcy Court of the Southern District of New York presided by Judge Martin Glenn.

This is not the only legal activity against Celsius, where SEC and FTC complaints were filed in 2023. Those suits, which include accusations against Celsius and its previous executives, are still in progress. However, the Tether case is not a regulatory case, but a case about the Bitcoin liquidation issue.