Celsius Bankruptcy Settlement Reached: Tether to Pay $299.5 Million to Resolve Claims

After years of fierce legal dispute, the Celsius Network bankruptcy proceedings have reached a resolution. Tether, the major stablecoin issuer, has committed to paying $299.5 million to the Celsius bankruptcy estate, formally settling all outstanding claims and adversary proceedings. The Blockchain Recovery Investment Consortium (BRIC)—a collaborative recovery vehicle backed by investment firm VanEck and GXD Labs—announced the accord recently, marking a significant turning point in one of crypto’s most contentious bankruptcy cases.

The settlement came through BRIC, which was designated by Celsius creditors and debtors’ committees in January 2024 to oversee asset recovery and litigation management. “We are pleased to have resolved Celsius’s adversary proceeding and related claims against Tether,” stated David Proman, managing partner at GXD Labs, in the official announcement. While the $299.5 million represents a substantial recovery for creditors, it amounts to just under 7% of the nearly $4.5 billion Celsius originally sought in bitcoin claims.

The Years-Long Battle Over Bitcoin Collateral and Liquidation

The dispute centered on a dramatic event in 2022 when Tether liquidated approximately 39,500 Bitcoin that Celsius had pledged as collateral. According to Celsius’s legal position, Tether violated their agreement by failing to provide the required 10-hour notice before selling these security assets. The crypto lender argued that this premature action stripped away the remaining equity they had in the position.

Tether presented a different narrative. The stablecoin provider maintained it acted entirely within the terms of their 2022 contract, which required Celsius to post additional collateral as Bitcoin prices fell during the market downturn. When Celsius failed to meet the margin call demand, Tether asserted it had the right to liquidate the bitcoin holdings to cover an $815 million outstanding debt. Tether characterized Celsius’s lawsuit, filed in August 2024, as a “baseless shakedown.”

A U.S. bankruptcy judge in New York permitted Celsius’s case to move forward earlier in 2024, despite Tether’s denial of any wrongdoing. The legal proceeding thus continued until recently, when both parties agreed to the settlement through BRIC’s mediation.

Payment Resolution Falls Substantially Short of Original Claims

The $299.5 million payment, while representing a victory for Celsius’s creditors and affected claimants, remains modest in comparison to the staggering losses incurred when Celsius collapsed. This outcome reflects the realities of bankruptcy recovery—claims holders rarely recover anywhere near their full losses in contested proceedings.

Celsius, once among the largest cryptocurrency lending platforms, froze all customer withdrawals in mid-2022 amid collapsing token valuations and failed investment strategies. The subsequent bankruptcy filing exposed billions in customer losses and revealed widespread allegations of executive mismanagement. The financial devastation extended far beyond the company itself, destabilizing confidence across the entire digital asset lending sector.

The Celsius Collapse and Its Ripple Effects Across Crypto Markets

The 2022 cryptocurrency credit crisis fundamentally transformed how courts and regulators approach digital asset lending agreements. Celsius’s implosion occurred alongside failures at other major platforms—Voyager and BlockFi both entered bankruptcy, while FTX experienced a spectacular collapse that exposed systemic fraud. These cascading failures triggered an extended wave of litigation and recovery initiatives that continues reshaping the legal framework for crypto collateral arrangements and lending practices.

The aftermath also brought criminal accountability. Former Celsius CEO Alex Mashinsky was convicted of fraud and market manipulation, receiving a 12-year prison sentence in May 2025. Prosecutors demonstrated that Mashinsky had misused customer funds and artificially inflated valuations of the CEL platform token. Subsequently, in June 2025, Mashinsky agreed to forfeit any personal claims to assets recovered from the bankruptcy proceedings, ensuring those funds flow directly to creditors.

The Celsius settlement serves as a stark reminder of the risks embedded in cryptocurrency lending models that lack adequate regulatory oversight and transparent risk management. The resolution will likely inform how future recovery efforts proceed and may influence court decisions regarding similar disputes over collateral agreements in the evolving digital finance landscape.