tl;dr
Tether's $299.5M deal with Celsius Network's bankruptcy estate sparks debates over stablecoin liability, marking a pivotal moment in crypto regulation and financial accountability.
**Tether Settles with Celsius Bankruptcy Estate in $299.5M Deal, Sparking Legal Debates Over Stablecoin Liability**
In a significant development marking the aftermath of one of crypto’s most turbulent chapters, stablecoin issuer Tether has agreed to pay $299.5 million to the bankruptcy estate of Celsius Network, resolving long-standing claims tied to the crypto lender’s 2022 collapse. The settlement, announced by the Blockchain Recovery Investment Consortium (BRIC), a joint venture between asset manager VanEck and GXD Labs, signals a potential shift in how stablecoin issuers are viewed in the context of financial distress.
The dispute centered on Bitcoin (BTC) collateral liquidations that preceded Celsius’s bankruptcy in July 2022. Celsius had alleged that Tether improperly sold Bitcoin collateral when its price aligned with the value of Celsius’s debts, effectively wiping out the company’s position and accelerating its insolvency. The case highlighted the volatile nature of crypto markets and the precarious role of stablecoins, which are designed to maintain a 1:1 peg with fiat currencies like the U.S. dollar.
BRIC, formed in 2023 to maximize recoveries for creditors of bankrupt digital-asset platforms, was appointed as asset recovery manager and litigation administrator for Celsius in January 2024. The $299.5 million settlement—while a fraction of the $4 billion in claims Celsius had initially sought—represents a key step in the winding-down of the bankruptcy process. However, the broader lawsuit against Tether, approved by a bankruptcy court in July 2025, remains active, leaving questions about how this settlement will intersect with ongoing legal battles.
The agreement has reignited debates about the liabilities of stablecoin issuers. Traditionally, entities like Tether have maintained that their role is purely transactional, facilitating token issuance and redemption without assuming responsibility for how those assets are used across exchanges or lending platforms. However, the case underscores the growing legal exposure for stablecoin providers when acting as counterparties in distressed markets. Analysts suggest this could prompt regulators and courts to reevaluate the responsibilities of stablecoin issuers in future insolvencies.
Celsius’s collapse was part of a broader wave of crypto failures in 2022, which triggered a prolonged bear market and set the stage for the subsequent downfall of FTX. The fallout was severe: Celsius’s former CEO, Alex Mashinsky, agreed to forgo any assets from the bankruptcy estate and was later sentenced to 12 years in prison for fraud. Other major crypto lenders, including BlockFi and Voyager Digital, also filed for bankruptcy protection, while Genesis Global Capital followed in 2023.
A Federal Reserve Bank of Chicago analysis revealed that customers withdrew nearly $13 billion from crypto platforms between May and November 2022, as confidence in the sector crumbled. High-yield products, which offered returns exceeding 17% in some cases, had initially attracted investors during the bull market but proved unsustainable when prices collapsed.
The Tether-Celsius settlement, while a financial resolution, also serves as a cautionary tale for the crypto industry. As regulators increasingly scrutinize stablecoins and their role in financial stability, the case could set a precedent for how courts and policymakers address the risks and responsibilities of stablecoin issuers in an era of rapid technological and market evolution.
For now, the deal marks a step toward closure for Celsius’s creditors—but the legal and regulatory implications will likely linger, shaping the future of crypto regulation for years to come.