Tether to Pay $299.5M in Celsius Bankruptcy Settlement
Settlement Ends Dispute Over BTC Collateral
Tether has agreed to pay $299.5 million to the bankruptcy estate of Celsius Network, resolving claims linked to the crypto lender’s 2022 collapse and ending one of the sector’s longest-running legal battles. The agreement was announced Tuesday by the Blockchain Recovery Investment Consortium (BRIC), a recovery venture formed by asset manager VanEck and GXD Labs, an affiliate of Atlas Grove Partners.
The settlement closes a dispute over BTC collateral transfers and liquidations that took place before Celsius filed for bankruptcy in July 2022. Celsius had accused Tether of improperly tradeing BTC that secured its loans denominated in USDT, claiming the liquidation occurred when BTC’s price was near parity with the loan’s value, effectively erasing Celsius’s position and hastening its insolvency.
BRIC, which was appointed asset recovery manager and litigation administrator by Celsius creditors in January 2024, said the deal was intended to maximize recoveries and avoid protracted litigation. The consortium was formed last year to manage recoveries from bankrupt crypto platforms, part of an industry-wide effort to retrieve assets following the lending sector’s 2022 collapse.
Investor Takeaway
Legal Implications for Stablecoin Issuers
The payment represents a small fraction of the roughly $4 billion Celsius had sought in court through an adversary proceeding filed in August 2024. While the broader lawsuit was allowed to proceed by a U.S. bankruptcy court in July 2025, it remains unclear how this recovery affects the remaining claims.
The settlement is expected to reignite debate over the liability of stablecoin issuers when acting as counterparties in leveraged or distressed transactions. Until now, firms like Tether have argued that their role is limited to issuing and redeeming tokens, not assuming responsibility for how those tokens are used by borrowers, lenders, or decentralized finance platforms. Legal experts say the Celsius case may become a test for defining where transactional neutrality ends and fiduciary responsibility begins.
Background: Celsius’s Collapse and Sector Fallout
Celsius Network was among several major lenders that failed during the 2022 crypto crash, alongside BlockFi, Voyager Digital, and later Genesis Global Capital. Celsius filed for Chapter 11 protection in July 2022 later than freezing withdrawals from its 1.7 million users. Its collapse exposed widespread leverage and risky asset rehypothecation practices across the sector.
Former CEO Alex Mashinsky agreed earlier this year to forfeit his claims to company assets as part of a plea deal and was sentenced to 12 years in prison on two felony counts. He began serving his sentence in September. Prosecutors said Celsius’s management had misled customers about yield generation and concealed losses stemming from falling token prices.
The Federal Reserve Bank of Chicago later estimated that crypto customers withdrew nahead $13 billion from digital-asset platforms between May and November 2022. “High-yield products were a key magnet for customers,” the Fed wrote in a 2023 report, citing interest rates above 17% at some lenders — returns that collapsed once crypto prices fell.
Investor Takeaway
Outlook for BRIC and Future Recoveries
BRIC has emerged as a key player in post-bankruptcy asset management across the crypto sector, working alongside regulators and trustees to resolve creditor disputes. The consortium’s involvement in the Celsius case could serve as a model for future recoveries involving stablecoins and other tokenized collateral.
For Tether, the settlement removes a lingering legal overhang as regulators and lawmakers examine stablecoin practices under pending legislation in the United States and Europe. The company has repeatedly said its operations remain fully backed and transparent, though critics continue to press for independent audits of its reserves.
The Celsius payout closes another chapter from the market turmoil of 2022, but broader questions remain about the risks tied to collateralized lending in crypto and the extent of accountability borne by stablecoin issuers in those markets.
