Stablecoin Giant Tether Pays $300 Million to Resolve Celsius Dispute

The settlement, announced by the Blockchain Recovery Investment Consortium (BRIC) – a partnership between VanEck and GXD Labs – marks a major step in one of crypto’s most closely watched bankruptcy disputes.

Formed in early 2023, BRIC was tasked with recovering assets for Celsius creditors following the platform’s bankruptcy. Celsius had accused Tether of improperly liquidating Bitcoin collateral that secured USDt-denominated loans, arguing that the move wiped out its position and hastened its insolvency. Although Celsius initially sought around $4 billion in damages, the final settlement represents a small fraction of that amount.

The deal could have far-reaching implications for the broader crypto market, particularly regarding the role and liability of stablecoin issuers during financial crises. Until now, Tether and similar entities have maintained that their function is limited to token issuance and redemption, without bearing responsibility for the use of those tokens by exchanges, lenders, or DeFi protocols.

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Celsius’s bankruptcy remains one of the most significant events of the 2022 crypto crash, which also saw the downfall of major lenders like BlockFi, Voyager, and later Genesis. The contagion erased billions in customer funds and severely damaged market confidence, with an estimated $13 billion withdrawn from crypto platforms during that year’s liquidity crunch, according to the Federal Reserve Bank of Chicago.

Former Celsius CEO Alex Mashinsky, once a prominent figure in the lending space, agreed earlier this year not to claim any company assets and is currently serving a 12-year prison sentence.

The settlement not only closes a contentious chapter between Tether and Celsius but also reignites debate over how regulators and courts will treat stablecoin issuers involved in distressed market situations going forward.

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