Main Highlights
- Tether has agreed to pay $299.5 million to the Celsius Network bankruptcy estate.
- This settlement resolves allegations that Tether violated bankruptcy law by liquidating collateral prior to Celsius’s 2022 bankruptcy.
- The Blockchain Recovery Investment Consortium (BRIC) managed the legal action to maximize recoveries for Celsius creditors.
The Blockchain Recovery Investment Consortium (BRIC) has announced a significant settlement requiring Tether to pay $299.5 million to the bankrupt estate of the crypto lending platform, Celsius Network.
This agreement concludes a legal dispute initiated earlier this year. BRIC filed an adversary proceeding in August 2024 within the U.S. Bankruptcy Court for the Southern District of New York. The lawsuit alleged that Tether had contravened bankruptcy laws and other legal obligations.
Specifically, Tether was accused of transferring and selling collateral in the period leading up to Celsius’s bankruptcy filing in July 2022. This settlement directly addresses these claims and mandates a substantial payment to the fund designated for Celsius’s creditors.
💡 The settlement marks a notable resolution in the complex aftermath of the Celsius Network’s collapse, aiming to provide some recovery for affected creditors.
David Proman, Managing Partner of GXD Labs, expressed satisfaction with the outcome, stating, We are pleased to have resolved Celsius’s adversary proceeding and related claims against Tether. In addition, we are pleased with the timeliness with which the settlement was achieved.
BRIC, a joint venture between GXD Labs and global asset manager VanEck, was established in early 2023 to enhance recoveries from the failures of cryptocurrency companies, including the Celsius bankruptcy. Its role was officially recognized in January 2024 when it was appointed as the Complex Asset Recovery Manager and Litigation Administrator by Celsius’s debtors and the official committee representing unsecured creditors.
📍 BRIC’s appointment by key stakeholders underscores its specialized mandate in navigating intricate bankruptcy proceedings within the digital asset space.
Ongoing Creditor Recovery Efforts
BRIC’s work extends beyond this settlement. The consortium continues to manage a portfolio of illiquid and litigation assets for the Celsius bankruptcy. Its ongoing oversight of Celsius’s remaining affairs aims to facilitate the return of funds to creditors who suffered losses.
The leadership of BRIC combines specialized expertise from GXD Labs and VanEck, enabling them to effectively manage complex litigation and illiquid cryptocurrency assets.
Understanding the Celsius Network Bankruptcy
Celsius Network, a New Jersey-based cryptocurrency lending platform, enabled users to earn high yields on assets like Bitcoin and Ethereum by lending them out. During the 2022 crypto winter, the market experienced significant turmoil following the collapse of TerraUSD (UST) and Luna, leading to a substantial decline in market capitalization.
Celsius faced a severe bank run, with reported daily withdrawals exceeding $1 billion. This surge in withdrawals exposed the platform’s liquidity shortfalls, exacerbated by unsecured loans to entities like Three Arrows Capital (3AC).
⚡ In response to extreme market conditions and liquidity pressures, Celsius halted all withdrawals, swaps, and transfers, freezing approximately $4.7 billion in customer funds. Subsequently, the company filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York.
Court filings revealed that Celsius held around $4.3 billion in total assets against $5.5 billion in liabilities. This imbalance led to users becoming unsecured creditors due to the company’s alleged poor asset deployment decisions.
A report by an independent examiner described the Celsius model as Ponzi-like. Founder Alex Mashinsky resigned in September 2022 amid fraud investigations and was arrested in July 2023 on charges of securities fraud and market manipulation. Mashinsky was sentenced to 12 years in prison on June 17, 2025.
Expert Summary
The settlement between Tether and the Celsius Network bankruptcy estate, facilitated by BRIC, resolves significant legal allegations. Tether will pay $299.5 million to creditors, stemming from claims of violating bankruptcy law by liquidating collateral before Celsius’s collapse.
BRIC continues its management of remaining assets and litigation to maximize recoveries for those affected by the Celsius bankruptcy, an event that significantly impacted the crypto lending landscape.