Lost Your Celsius Network Investment? Tether Got Back $840 Million

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Last Updated on 28 July 2022 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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Just as Bitcoin (up 8%) and Ethereum (up 11%) jumped up over the Fed’s announcement, crypto’s biggest stablecoin issuer Tether is once again facing wrath on social media after it emerged that it somehow got a ‘preference’ in repayment by the now bankrupt crypto lender Celsius.

As Celsius filed for bankruptcy protection in the US this month, lawyers and accountants are going through their books to see what they can recoup. One of the more striking things they found is that the $4 billion of debt should have normally been about $5 … if it were not for Tether being able to recoup their $840 million loan just in time.

As Alex Hern correctly summarized:

Tether made a collateralised loan to Celsius, and then liquidated the collateral to ensure it didn’t lose money when Celsius went bust. But it… might not have been supposed to do that.

Advertentie.

Preference

By now, bankruptcy lawyers were commenting in business media already as to what should happen next. Should Tether have gotten a preference for repayment over other creditors or how should this work. As it is possible that more firms get into trouble in the next few weeks and months, this could become an important question.

We’re in an area where the law is quite uncertain and quite at odds with the market’s general expectations.

Explained attorney Brandon Hammer of global law firm Cleary Gottlieb.

As Celsius declared at the time of its bankruptcy that it had $5.5bn in liabilities but only $4.3bn in assets, creditors are clearly looking to find any gaps they can exploit. Robert Gayda of law firm Seward & Kissel explained:

If you have somebody who’s not going to recover in full, you’re going to have a motivated creditor body who are going to want to look at that Tether transaction.