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Tether, the issuer of the stablecoin USDT, has fired back at Celsius Network in response to a lawsuit filed against the company on Friday. Tether called the case an “extortion attempt” to shift blame for Celsius’s financial mismanagement onto Tether.

According to a recent blog post from Tether, the company and Celsius entered into an agreement in 2022 where Celsius borrowed USDT from Tether and used Bitcoin (BTC) as collateral.

When BTC’s price dropped, Celsius refused to provide additional collateral as required by the agreement. Tether then liquidated the BTC collateral under the terms of the agreement when Celsius failed to meet its obligations, the company explained.

Celsius is now accusing Tether, through its Blockchain Recovery Investment Consortium, of improper liquidation. Celsius is seeking approximately $2.4 billion in BTC restitution from Tether, but the stablecoin issuer claims the lawsuit is baseless and vows to defend itself.

“Tether will never fall prey to blatant lawsuits to steal funds. We will vigorously defend ourselves against the unwarranted allegations brought against us, and we expect to prevail in this lawsuit,” Tether said.

In a post on X, Tether CEO Paolo Ardoino argued that Tether acted according to its contract and that the lawsuit misinterprets basic concepts of risk management, market disruptions, and liquidation processes.

He said that even if the lawsuit were to go ahead, Tether’s strong financial position, with nearly $12 billion in equity, would ensure that USDT holders would not be affected.

“When it comes to the safety of USDT users, that is without a doubt our biggest priority and obligation. Tether Group has a net worth of almost $12 billion. Even in the most remote scenario where this baseless lawsuit goes anywhere, USDT token holders will not be affected,” Ardoino noted.

Celsius Network, previously one of the leading cryptocurrency lenders, emerged from bankruptcy earlier this year after completing transactions as part of its confirmed restructuring plan, including distributing more than $3 billion in crypto and cash to creditors.

Celsius creditors also received shares in Ionic Digital, a Bitcoin mining company founded in February, as part of the bankruptcy filing. Ionic has mined more than 1,300 BTC since its founding and currently owns more than 1,800 BTC, the company said in a recent press release.

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