The legal action was managed by the Blockchain Recovery Investment Consortium (BRIC), which was appointed to maximize recoveries for Celsius’s creditors
The Blockchain Recovery Investment Consortium, known as BRIC, has announced a major settlement requiring Tether to pay $299.5 million to Celsius Network, a bankruptcy estate of the failed crypto lending platform.
This agreement brings to a close a legal dispute that was initiated just a few months ago. The legal action was an adversary proceeding, a type of lawsuit within a bankruptcy case, which BRIC filed in August of this year in the U.S. Bankruptcy Court for the Southern District of New York.
In the lawsuit, some serious allegations have been made against Tether. It claimed that Tether had broken bankruptcy laws and other related legal duties.
The specific accusation was that Tether transferred and sold off collateral in the time leading up to Celsius’s bankruptcy filing in July 2022. This new settlement directly addresses those claims and results in a major payment being made to the pool of money intended for Celsius’s creditors.
David Proman, the Managing Partner of GXD Labs, commented on the resolution. He stated, “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.”
The legal case was managed through BRIC, which is a joint venture created by GXD Labs and the global asset manager VanEck. BRIC was created in early 2023 with a specific goal to increase the money recovered from crypto-based company failures, such as the Celsius bankruptcy.
Its role became official in January 2024 when it was appointed as the Complex Asset Recovery Manager and Litigation Administrator. This appointment was made by the debtors and the official committee representing unsecured creditors in the Celsius case.
The work of BRIC is not finished with this settlement. The consortium continues to manage a portfolio of illiquid assets and other litigation assets for the Celsius bankruptcy incident. It is overseeing the wind-down of Celsius’s remaining affairs to cover the return of the creditors who lost money.
The team leading BRIC brings together specialized expertise from both GXD Labs and VanEck. This collaboration helps firms to manage litigation and illiquid cryptocurrencies.
Celsius Network, a New Jersey-based cryptocurrency lending platform, allowed users to earn high yields on deposited assets like Bitcoin and Ethereum by lending them out.
During ‘crypto winter’ in 2022, the sudden collapse of TerraUSD (UST) and Luna triggered market panic in the entire cryptocurrency market, wiping out billions of dollars of market cap due to a massive sell-off. Celsius faced a “bank run’ with over $1 billion in daily withdrawals. This abnormal spike in withdrawal rate exposed the platform to liquidity shortfalls from unsecured loans to firms like Three Arrows Capital (3AC).
Due to this massive trading volume, Celsius halted all withdrawals, swaps, and transfers by citing “extreme market conditions.” This froze $4.7 billion in customer funds. Later on, the company filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York.
These court filings revealed approximately $4.3 billion in total assets and $5.5 billion in liabilities. Due to this, users became unsecured creditors due to the company’s poor asset deployment decisions.
