A US bankruptcy judge has allowed Celsius Network's lawsuit against Tether, regarding the alleged improper liquidation of over 39,500 Bitcoin during Celsius's collapse, to proceed. Celsius claims that Tether executed a 'fire sale' of Bitcoin at an average price significantly below market levels, violating their lending agreement and breaching principles of good faith and fair dealing under British Virgin Islands law. Tether implemented a margin call as Bitcoin prices fell, liquidating the collateral within a 10-hour waiting period. Celsius alleges the action resulted in a loss of over $4 billion worth of Bitcoin. The court ruled that there were sufficient ties to the US for jurisdiction, dismissing Tether's claims of extraterritorial application of US bankruptcy law. Although some claims were dismissed, key parts related to breach of contract and fraudulent transfers will continue in court. Celsius, once a major crypto lender, is currently in the process of repaying creditors after bankruptcy proceedings started in mid-2022.

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