A recent ruling from the U.S. Bankruptcy Court has paved the way for Celsius Network to continue its $4 billion lawsuit against stablecoin issuer Tether. The dispute centres on the alleged improper liquidation of 39,500 Bitcoin – now worth approximately $4 billion – held by Tether as collateral for an $812 million loan. Celsius argues that Tether violated key contractual terms, including a mandatory 10-hour waiting period before liquidation.
While the court dismissed certain claims linked to the British Virgin Islands' duty of good faith and fair dealing, the decision to let the core contractual dispute proceed is being closely watched across the cryptocurrency and legal sectors.
Partner Peter Vas said the ruling may have wide-reaching implications for cross-border disputes involving digital assets.
"This development will clearly be of concern to offshore cryptocurrency firms incorporated in the British Virgin Islands and elsewhere," Peter noted, "which must carefully navigate jurisdictional exposure and ensure rigorous governance to avoid costly litigation in the USA."
Peter emphasised that the judge's decision reinforces the possibility of U.S. courts asserting jurisdiction even when a firm is incorporated offshore, so long as the alleged misconduct involves U.S.-based communications, personnel, or financial accounts.
Peter also noted the importance of clear contractual drafting in cross-border transactions. "This ruling is a reminder that contractual obligations must be clearly drafted to reflect the commercial objectives of the parties."
Celsius, which collapsed in 2022 during the crypto market downturn, has since repaid $2.5 billion to over 251,000 creditors, covering 93% of total claims. The outcome of the Tether litigation could influence how courts approach jurisdiction, governance, and enforcement across international crypto dealings.
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