As an analyst with over two decades of experience in the financial industry, I find myself increasingly intrigued by the ongoing drama between Tether and Celsius Network. While it is essential to maintain objectivity, the situation seems to be more complex than initially perceived.
Tether, a company responsible for issuing stablecoins, denies being held accountable for alleged Bitcoin fraud by Celsius Network. Paolo Ardoino, Tether’s CEO, provided clarity on the events that unfolded between the two entities.
Tether Calls Celsius Network’s Claim Baseless
Lately, Celsius Network has taken legal action against Tether, the issuer of USDT, and its related parties, alleging that their actions led to Celsius’ bankruptcy. In this lawsuit, it is claimed that Tether made transfers of Bitcoin totaling more than $2 billion (as per today’s market value) which were deemed as fraudulent and preferential in nature.
In other words, Celsius Network aims to recover the Bitcoin that was lost from the collapsed estate because of the stablecoin issuer’s activities during a crucial time prior to the company’s bankruptcy filing.
Instead, Ardoino looked back at the past events to paint a clear picture. He pointed out that the company provided USDT to certain clients, and Celsius was among them. The relationship between these chosen customers and the firm essentially entailed giving them USDT in exchange for overcollateralization in Bitcoin.
“In case the value of bitcoin (which serves as security) drops lower than the specified margin call level, the lender requires additional security from the borrower. If no extra security is provided, Tether reserves the option to sell off the borrower’s position.”
The company’s choice to allow overcollateralization on assets such as Bitcoin appears to be part of their innovative approach to managing risk exceptionally well. During the significant price drop of Bitcoin in 2022, Celsius Network requested the USDT issuer to sell the BTC used as collateral that they held.
As a seasoned investor and cryptocurrency enthusiast with years of experience under my belt, I have always been keenly interested in stablecoins like Tether (USDT). In 2022, I witnessed firsthand how Tether made USDT available to certain customers, among them being the popular crypto lending platform Celsius.
If the price of bitcoin (the collateral) falls…
— Paolo Ardoino (@paoloardoino) August 10, 2024
In response to the request, the stablecoin firm liquidated its Bitcoin holdings and refunded the surplus amount back to the Celsius Network. Subsequently, Ardoino declared that the Celsius Network’s assertion was unfounded, as the sold Bitcoin served to secure their exchange’s position during that period.
Readiness to Pursue a Legal Redress
Besides identifying additional issues with the Celsius lawsuit submission, Ardoino and his colleagues expressed readiness to pursue legal remedy. The company views the lawsuit as an attempt at extortion, but they are prepared to engage in court proceedings to establish a significant legal precedent within the wider market.
It appears that Celsius Network has reportedly taken legal action against several of its own users, with the aim of recovering funds to pay back its creditors. This move has sparked resistance, which seems to be Tether collectively standing up for other users who have been targeted by these lawsuits.
On a different thread about X, Ardoino expressed gratitude for the community’s support as they prepare to engage in another legal battle.
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2024-08-10 20:14