A U.S. bankruptcy judge has permitted bankrupt crypto lender Celsius to advance its $4 billion lawsuit against Tether, alleging improper liquidation of 39,500 Bitcoin utilized as loan collateral. Celsius claims that Tether breached contractual terms, notably failing to adhere to a specified 10-hour waiting period before liquidating the Bitcoin in 2022, leading to significant financial losses. Despite ongoing litigation, Celsius has already distributed $2.5 billion to 251,000 creditors since January 2024, addressing 93% of the total claims. Celsius’s lawsuit stems from the need to recover funds after Tether liquidated the Bitcoin collateral to meet an $812 million claim, amid a drastic decline in cryptocurrency values. The judge dismissed some of Tether's motions but ruled that the case could proceed, a decision that could set a precedent for future cross-border disputes involving cryptocurrency and U.S. jurisdiction. The ruling underscores the importance of clearly defined contractual obligations in the crypto sector.

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