Tether Pays $300 Million to Settle Celsius Bankruptcy Claims – Here’s Why

TLDR

• Tether agreed to pay $299.5 million to settle claims from the Celsius Network bankruptcy estate related to Bitcoin collateral liquidations
• The settlement resolves a dispute over liquidations that occurred before Celsius collapsed in July 2022
• Celsius had originally sought roughly $4 billion in claims against Tether in court proceedings
• The Blockchain Recovery Investment Consortium (BRIC), formed by VanEck and GXD Labs, announced the recovery
• The settlement represents one of the largest recoveries in the ongoing Celsius bankruptcy wind-down process

Stablecoin issuer Tether has agreed to pay $299.5 million to resolve claims from the Celsius Network bankruptcy estate. The settlement ends a dispute over Bitcoin collateral transfers that happened before the crypto lender’s collapse in July 2022.

The Blockchain Recovery Investment Consortium announced the settlement on Tuesday. BRIC is a joint venture between asset manager VanEck and GXD Labs, an affiliate of Atlas Grove Partners.

Celsius had sued Tether over the liquidation of Bitcoin collateral that backed loans denominated in USDT. The lawsuit claimed Tether sold the collateral when Bitcoin’s price closely matched Celsius’s debt value. This action effectively eliminated Celsius’s position.

BRIC was created in early 2023 to help maximize recoveries from bankrupt digital asset platforms. The group was appointed as asset recovery manager and litigation administrator by Celsius in January 2024.

The $299.5 million payment is much less than the roughly $4 billion Celsius had sought in court. Celsius filed the adversary proceeding in August 2024. In July 2025, the bankruptcy court approved the lawsuit against Tether to move forward.

Legal Questions for Stablecoin Issuers

The settlement may raise questions about legal exposure for stablecoin issuers when they act as counterparties in troubled crypto markets. Until now, companies like Tether have maintained their role is purely transactional.

They facilitate the issuance and redemption of tokens. They argue they don’t bear liability for how those tokens are used across exchanges, lenders or DeFi platforms.

Celsius Network’s bankruptcy was part of a series of crypto failures in 2022. The collapses pushed the industry into a bear market. The crisis eventually led to FTX’s collapse later that year.

Former Celsius CEO Alex Mashinsky faced severe consequences. He agreed in June not to claim any assets from the bankruptcy estate. He was later sentenced to 12 years in prison on two felony counts.

Mashinsky reported to prison in September. His case represents one of the most high-profile criminal prosecutions from the 2022 crypto failures.

Industry-Wide Collapse

Celsius was not the only major lender to fail. BlockFi and Voyager Digital both filed for bankruptcy protection in 2022. Genesis Global Capital followed the next year.

The Federal Reserve Bank of Chicago analyzed the crisis. Customers withdrew nearly $13 billion from crypto platforms between May and November 2022. Confidence evaporated across the sector.

The Chicago Fed noted that high-yield products attracted customers to some platforms. Interest rates exceeded 17% in some cases. These rates drew investors during the bull market but proved unsustainable when prices collapsed.

Celsius exited bankruptcy in 2024. The company shipped out more than $3 billion to creditors during the wind-down process.

BRIC continues to manage a portfolio of illiquid and litigation assets tied to Celsius. The joint venture had previously tried to acquire the assets of the insolvent lender. The remnants of Celsius Network went to rival bidder Fahrenheit in 2023.

The $299.5 million recovery settles the matter in the U.S. Bankruptcy Court for the Southern District of New York.

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