Latest news with #CelsiusNetwork
Coin Geek
11-07-2025
- Business
- Coin Geek
Tether can't shake Celsius lawsuit; Bitfinex launches ‘stablechain'
Getting your Trinity Audio player ready... Tether has lost its bid to dismiss a claim by administrators of the bankrupt Celsius Network looking to claw back billions of dollars' worth of 'improperly' liquidated BTC tokens. June 30 brought a ruling by Judge Martin Glenn in the U.S. Bankruptcy Court for the Southern District of New York in the case pitting Celsius Debtors against Tether, issuer of the market-leading USDT stablecoin. (Comically, the filing declares it to be the 'PUNITED STATES' court, which we'll assume is a typo, but hey, grounds for appeal?) First, some background. The suit was filed last August based on the Debtors' belief that Tether had crossed legal lines by selling nearly 40,000 BTC tokens—currently worth ~$4 billion—that Celsius had put up as collateral for USDT-based loans. Celsius went bankrupt in July 2022 in a haze of criminal fraud allegations, for which founder Alex Mashinsky was sentenced to 12 years in prison earlier this year. Celsius was effectively a Ponzi scheme from its inception, forcing Mashinsky to be constantly borrowing from one source to pay others. The latter category included Celsius customers, who purchased and staked the platform's native CEL token based on Mashinsky's promises of massive returns for doing so. Tether's ties to Celsius went beyond merely providing loans that the company couldn't get from a bank. As Mashinsky's own emails indicate, Tether was using Celsius to service 'all their US clients,' including market-makers Cumberland, Jump, and others. But as 2022's wave of crypto frauds, bankruptcies, and implosions began, BTC's price began to fall. This prompted Tether to issue margin calls requiring additional collateral to support the $512 million in USDT that Celsius had borrowed. Over a six-week period ending on June 12, 2022, Celsius sent nearly 17,000 additional BTC to Tether. These BTC transfers occurred during the 90-day period preceding Celsius' filing for bankruptcy, which under the U.S. Bankruptcy Code, are eligible to be 'clawed back' by bankruptcy administrators. Celsius also borrowed another $300 million worth of USDT during this period, for which it transferred another 10,700 BTC to Tether. Over 2,200 of this BTC was excess collateral. As Celsius began to circle the drain, Tether declined to provide further USDT loans to Celsius and liquidated the BTC put up as collateral. This liquidation didn't honor the 10-hour waiting period following a margin call that was stipulated under the terms of the loans. An amended agreement that the parties signed in January 2022 stipulated that if Tether liquidated the Celsius BTC, any surplus proceeds were to be paid to Celsius. Instead, Tether sold the BTC at what Celsius claims were below-market prices and kept the proceeds for itself, an action that Celsius alleges cost the company $100 million. Last November, Tether filed to dismiss the Celsius claim, citing the plaintiffs' lack of standing, a lack of personal jurisdiction, and the plaintiffs' failure to state a claim upon which relief can be granted. Last week, Judge Glenn rejected most of Tether's arguments but dismissed Count IV of the complaint, which alleged that Tether had breached a covenant of good faith and fair dealing under the laws of the British Virgin Islands (Tether's home base at the time) by liquidating the BTC. However, Glenn gave Celsius leave to amend their complaint. As of last August, bankruptcy administrators had distributed $2.5 billion to 251,000 Celsius creditors, representing roughly two-thirds of the total number of former customers. Many of the remaining 121,000 creditors had yet to claim their owed funds, some because the amounts were trivial, others for reasons unknown (including the possibility that coming forward would require identifying themselves). Tether is by no means the only entity in the sights of the Celsius administrators. In March, Celsius sued Chainalysis, accusing the blockchain analytics firm of performing a knowingly fraudulent audit of Celsius' assets under management in 2020 and of misleading Celsius customers and investors. Stablecoin-based stablechain is called Stable In other Tether news, the Bitfinex digital asset exchange (which shares ownership with Tether) just announced details of its previously hinted plans to launch Stable, 'a dedicated Layer 1 stablechain optimized for payments using USDT.' This 'stablechain' aims to reduce transaction fees and speed up settlement times, while making the whole process accessible to everyday users, serving as 'rails for the real world.' The official Stable site claims USDT is 'the world's most used asset' (the citation behind this claim appears to be missing), and Bitfinex believes such a popular means of transferring funds 'deserves its own chain.' Left unsaid is the likely view that the owners of Bitfinex and Tether deserve their own transaction fees, rather than letting third-party USDT-friendly networks like TRON (where $80.7 billion of USDT currently resides) and Ethereum ($73.8 billion) take their cut. Stable appears to be part of a trend in which crypto companies launch their networks on which the native token is one under their control. Take Base, the Ethereum layer 2 network launched by Coinbase (NASDAQ: COIN) exchange, which relies on the USDC stablecoin issued by Circle (NASDAQ: CRCL), in which Coinbase holds an equity stake. The aim appears to be ensuring a stake in all on-chain activities, at least, the revenue-generating kind. According to Bitfinex, Stable will use USDT as its 'gas' token for transaction fees, 'eliminating the complexity of holding additional, volatile tokens.' Fees will be 'well below a fraction of a cent,' while peer-to-peer USDT transfers will be gas-free. The network will come with its own Stable Wallet, which will feature 'social login, debit/credit card integration, and human-readable wallet aliases.' Bitfinex claims its new network will be capable of handling 'thousands of transactions per second' while offering institutions 'guaranteed blockspace allocation, scalable batch processing, and robust security measures.' Cross-chain bridging will be possible using USDT0 and LayerZero tech, while decentralized app (dApp) developers have been told to go nuts on stablecoin use cases. Stable's roadmap is currently in 'Phase 1,' which includes launching the StableWallet and implementing StableBFT, aka 'a customized PoS [proof of stake] consensus protocol built on CometBFT.' (BFT, if you were wondering, stands for Byzantine fault tolerance.) Phase 2 involves enhancing transaction throughput via optimistic parallel execution, launching USDT transfer aggregators, and offering dedicated blockspace to enterprises. The final phase involves those aforementioned dApp tools and a consensus mechanism based on directed acyclic graphs. Last month, longtime crypto entrepreneur Gabriel Abed, who was named chairman of the Binance exchange's first board of directors last year, was identified as a strategic investor in Stable. Back to the top ↑ Tether: big in Bolivia While stablecoins appear to be on the cusp of mainstream acceptance as a payment mechanism in North America and Europe, those are markets in which Tether appears unable to participate due to its inability to abide by regulatory constraints. In the European Union, Tether has effectively opted out of the Markets in Crypto Assets (MiCA) stablecoin framework due to the requirement for larger issuers to hold the bulk of their fiat reserves in cash in local banks. In America, two different stablecoin bills will allow Tether a lengthy grace period but will also impose requirements that Tether has been unwilling to undertake on its own, including submitting its reserves to a comprehensive third-party audit. Tether CEO Paolo Ardoino, who praised Stable's upcoming launch last month and was credited in turn for 'advising' the Stable team, has begun publicly declaring the company's 'core mission' to be focused on supporting 'emerging markets where access to stable financial infrastructure is urgently needed.' Last month, Ardoino tweeted that '[i]n Bolivia, real prices in shops are displayed in USD₮.' The tweet included photos of products for sale in an airport duty free store. Another photo showed explanatory signage reading: 'Our products are priced in USDT (Tether), a stable cryptocurrency with a reference price reported daily by the Central Bank of Bolivia, based on the Binance cryptocurrency trading platform. You can pay in Bolivian Bolivianos (BOB) or US Dollars (USD). The conversion will be made based on the daily USDT rate.' Recently, Reuters reported that Bolivians were increasingly turning to tokens such as USDT to hedge against the depreciation of the local currency. Last November, Bolivia's Banco Bisa began offering USDT custody to its banking customers. However, a former Bolivia central bank executive told Reuters that daily USDT volumes in the country are only around US$600,000. That's a pittance compared to tradfi volume of $18-$22 million, while cash-based black market sales are around $12-$14 million. Bolivia's central bank reported last week that transactions using Electronic Payment Channels and Instruments for Virtual Assets totaled $294 million in the first half of 2025, a 530% rise over the same period last year. The bank said these digital tools 'have facilitated access to foreign currency transactions, including remittances, small purchases and payments, benefiting micro and small business owners across various sectors, as well as families nationwide.' Back to the top ↑ Ardoino finds beautiful game not so beautiful up close Tether is the unquestioned stablecoin market leader, with USDT's market cap crossing $158.3 billion on July 2, a new record high. But that doesn't seem to impress the owners of Juventus FC, a fixture in Italy's Serie A football league. In February, Tether announced that it had taken an 8.2% stake in Juventus, marking the first investment by a digital asset firm in a major European football club. The following month, Tether announced that its Juventus stake had increased to 10.12%, representing 6.18% of the club's voting rights. By April, the stake had risen to 10.7%, representing a total outlay of roughly €128 million. But on June 2, Ardoino tweeted that the club—which is majority owned by the Agnelli family's investment firm Exor NV—hadn't allowed Tether to participate in a planned capital increase that commenced in April. Ardoino later complained in an interview that Tether had only had 'very, very limited' communications with the club and Exor. On June 25, Bloomberg reported that Tether still hadn't met with Juventus but was pushing the club to allow Tether a seat on its board of directors. Juventus has reportedly said it plans to meet with Tether executives when its current season concludes, after which Exor will 'evaluate its position' regarding Tether. It's almost as if the Agnelli family had some reason to think partnering with Tether might not be the best thing for the club's image. Back to the top ↑ Watch: Teranode is the digital backbone of Bitcoin title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen="">
Yahoo
04-07-2025
- Business
- Yahoo
NY Bankruptcy Judge Gives Celsius the Green Light to Pursue $4.3B Lawsuit Against Tether
A New York bankruptcy court has given Celsius the go-ahead to pursue the bulk of its $4 billion lawsuit against stablecoin issuer Tether, according to a recent court filing. The bankrupt crypto lender filed suit against Tether last year, alleging that Tether improperly liquidated nearly 40,000 bitcoins — worth over $4.3 billion at today's prices — that it was holding as loan collateral in June 2022, shortly before Celsius halted withdrawals. In their suit, Celsius' lawyers argued that Tether didn't give Celsius enough time to satisfy its collateral demands, which they claimed it had 'sufficient Bitcoin on its balance sheet' to do so 'given that Celsius had instituted a 'pause' on customer withdrawals … resulting in the retention of, and access to, a significant amount of Bitcoin.' 'If Celsius had been given the opportunity to meet the collateral demand — which it had a contractual right to do — it could have been able to avoid the disposition of its Bitcoin at near the bottom of the cryptocurrency market,' Celsius' lawyers wrote. 'Instead, that disposition was carried out for the benefit of just one creditor: Tether.' At the time the suit was filed, Tether pledged to fight it, calling the suit 'baseless' and a 'shameless litigation money grab' in a press statement. Tether claimed that Celsius executives directed the liquidation of its BTC collateral held by Tether in 'in order to close out its roughly 815 million USDT position' with the company.'Rather than recognize the clear validity of the agreement entered into years before Celsius' bankruptcy, this lawsuit seeks to improperly impose the costs of Celsius' mismanagement and failure on Tether,' the company's statement said. However, the judge overseeing the case disagreed with Tether, arguing in his Monday order that Celsius' then-CEO Alex Mashinsky — who was sentenced to 12 years in prison for fraud in May — 'alleged oral permission' given to Tether to liquidate Celsius' bitcoin collateral was 'insufficient' and that not giving Celsius the 10-hour window to post collateral allotted by the two firms' contract could still be a breach of contract, verbal permission or not. In his June 30th order, Chief Bankruptcy Judge Martin Glenn of the Southern District of New York (SDNY) granted threw out only one count of the amended complaint, Count 4, which alleged that Tether breached the 'covenant of good faith and fair dealing' under British Virgin Islands law. For that count, Glenn decided to dismiss it without prejudice, giving Celsius' lawyers the opportunity to amend it with 'facts sufficient to bring themselves within the requirements of BVI law.'
Yahoo
09-05-2025
- Business
- Yahoo
Celsius CEO Alex Mashinsky sentenced to 12 years in crypto fraud case
Alexander Mashinsky, founder and former CEO of the failed cryptocurrency platform Celsius Network, was sentenced to 12 years in prison on Thursday after pleading guilty to federal fraud charges. A plea agreement had called for up to 30 years. Mashinsky acknowledged illegally manipulating the price of Celsius' proprietary token while secretly selling his own tokens at inflated prices. He made $48 million off the scheme before Celsius filed for bankruptcy in 2022. By that time, Celsius had become one of the largest crypto platforms in the world, with around $25 billion in assets. Customers considered the business a modern bank where they could safely deposit crypto assets and earn interest. But Mashinsky admitted to making statements that gave them false comfort, including suggesting the business had been approved by regulators. Prosecutors said Mashinsky used slogans like 'Unbank Yourself' to persuade customers to invest — then used their deposits to pay for market purchases of the Celsius token to prop up its value. "I accept full responsibility for my actions," Mashinsky told the court in December as he pleaded guilty to two of the seven counts he was charged with. His downfall mirrors that of FTX's Sam Bankman-Fried, who was convicted of stealing around $8 billion from customers and sentenced to 25 years in prison. Other crypto bosses who have been in trouble since the industry's 2022 collapse include Binance's Changpeng Zhao, who was sentenced last year to four months in prison after pleading guilty to charges of enabling money laundering. In January, Do Kwon of Terraform Labs pleaded not guilty to fraud charges. Prosecutors say he was involved in a scheme to deceive investors in order to fraudulently inflate the value of Terraform's stablecoin. Senate Democrats on Thursday stopped a Trump-backed bill to regulate stablecoins, saying it needed stronger provisions for anti-money laundering, foreign issuers and national security. They also worried it could further enrich Trump, who is affiliated with a stablecoin business that could generate tens of millions of dollars a year in revenue for his family and their business partners.
Finextra
09-05-2025
- Business
- Finextra
Ex-Celsius CEO Mashinsky gets 12-year sentence for crypto fraud
Alexander Mashinsky, the former CEO of crypto firm Celsius Network, has been sentenced to 12 years in prison for commodities fraud and securities fraud. 0 Mashinsky pled guilty in December over his part in a scheme to defraud investors. Celsius operated a crypto asset platform offering customers 'rewards' on deposited assets, secured loans, and custody services. Marketing itself as the 'safest place for your crypto,' the firm encouraged customers to 'unbank' themselves by transferring crypto assets to its platform. By late 2021, Celsius had become one of the largest crypto platforms in the world, holding approximately $25 billion in assets at its peak. However, persecutors say that Mashinsky orchestrated a years-long scheme to mislead customers about Celsius's proprietary crypto token CEL, manipulating its price by spending hundreds of millions purchasing it on the open market to artificially inflate its value. Sometimes, they did this using customer funds without disclosing the fact. While publicly claiming he was not selling CEL, he was doing just that, profiting to the tune of approximately $48 million. In June 2022, Celsius announced it was halting customer withdrawals, leaving hundreds of thousands of customers unable to access $4.7 billion on the platform. The firm filed for bankruptcy the following month. US Attorney Jay Clayton says: 'Alexander Mashinsky targeted retail investors with promises that he would keep their 'digital assets' safer than a bank, when in fact he used those assets to place risky bets and to line his own pockets. In the end, Mashinsky made tens of millions of dollars while his customers lost billions." Mashinsky joins fellow crypto bosses FTX founder Sam Bankman-Fried, Binance's Changpeng Zhao and Do Kwon of Terraform Labs in receiving prison time.
Yahoo
09-05-2025
- Business
- Yahoo
Celsius founder sentenced to 12 years in prison
The founder of cryptocurrency lender Celsius Network was sentenced to 12 years in prison on Thursday. Alex Mashinsky, the company's former CEO, pleaded guilty to securities fraud and commodities fraud in December. Federal prosecutors said Mashinsky artificially boosted the value of Celsius' Cel token and profited more than $48 million as a result. Prosecutors led by U.S. Attorney Jay Clayton also said Mashinsky misled customers about Celsius' safety. 'The case for tokenization and the use of digital assets is strong but it is not a license to deceive,' Clayton, who is based in Manhattan, said in a statement. The sentence includes three years of supervised release and forfeiture of the $48.4 million he made while leading the company. The prosecution had sought a sentence of at least 20 years for Mashinsky, 59, saying it would be 'just punishment' for the billions of dollars in losses he caused for thousands of people. The founder pushed for a one year and one day term, saying he was remorseful. The Hoboken, New Jersey-based Celsius had offered customers as much as 17% interest on some deposits, but as crypto prices plummeted in the summer of 2022, customers rushed to withdraw their cash. Celsius had a $1.19 billion balance sheet deficit when it sought Chapter 11 bankruptcy protection in July of that year. The 12-year sentence is one of the longest to arise from the 2022 crypto market meltdown that stemmed from the collapse of the crypto exchange FTX. That company's founder, Sam Bankman-Fried, is serving a 25-year sentence for fraud. He's currently appealing his conviction. In addition to the criminal trial, Mashinsky has had civil lawsuits filed against him by the Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Trade Commission, and New York Attorney General Letitia James. For the latest news, Facebook, Twitter and Instagram.
