A New York bankruptcy court has permitted Celsius to continue with most of its $4 billion lawsuit against Tether, alleging that Tether improperly liquidated nearly 40,000 bitcoins in June 2022 to cover an outstanding loan. Celsius claims this liquidation process could have been avoided if granted more time to meet collateral demands, arguing they had sufficient Bitcoin assets available due to a pause on customer withdrawals. In their argument, Celsius lawyers highlighted that a lack of time provided by Tether for posting collateral contributed to significant financial harm during a critical market downturn. In response, Tether dismissed the lawsuit as ‘baseless’, asserting that Celsius executives had directed the liquidation to resolve its financial position. The judge ruled that the alleged verbal permission for liquidation was not sufficient, suggesting a possible breach of contract occurred when Tether did not allow Celsius a 10-hour window to respond according to their agreement. The court dismissed one count from Celsius without prejudice, allowing for amendments under the applicable British Virgin Islands law.

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