Tether, the entity behind USDT, the globe’s leading stablecoin by market capitalization, has firmly declared its intent to combat what it describes as “shakedown” litigation instigated by the now-bankrupt crypto lender, Celsius.

In a legal maneuver on Friday, Celsius petitioned the U.S. Bankruptcy Court for the Southern District of New York to mandate Tether’s surrender of 57,428.64 bitcoin (BTC) or, alternatively, the equivalent monetary value, amounting to approximately $3.3 billion at current valuations, as detailed in the court documents.

In response, Tether issued a statement asserting, “This lawsuit outrageously demands the return of roughly US$2.4 billion worth of BTC from Tether, despite the BTC having been liquidated at Celsius’ instruction and with Celsius’ explicit approval at June 2022 prices.” However, Tether did not clarify the method used to derive the $2.4 billion figure.

Read more: Tether Surpasses Expectations with $5.2 Billion Profit in H1 2024

The crux of the dispute revolves around a loan agreement between Celsius and Tether, wherein Celsius borrowed stablecoins to sustain pivotal operations within its business. The lawsuit alleges that during the market collapse of mid-2022, in the “ninety-day period preceding” Celsius’ bankruptcy declaration, Tether shielded itself from the looming financial ruin by orchestrating “preferential and fraudulent transfers” of bitcoin.

The lawsuit contends, “On multiple occasions, Tether demanded and secured substantial new collateral to fortify its position in anticipation of the impending bankruptcy.” This assertion forms the basis of Celsius’ claims against Tether.

Tether’s CEO, Paolo Ardoino, took to X (formerly Twitter) to refute the allegations, stating, “This unfounded lawsuit seeks to reclaim the bitcoin that were sold to mitigate Celsius’ exposure. The claimant’s filing is riddled with flaws, and we are confident in the strength of our contractual agreements and actions… We will fight this lawsuit vigorously to the end. It is crucial to set a precedent within the industry that opportunistic money grabs will not succeed.”

Celsius has also argued that in June 2022, Tether “applied Celsius’s Bitcoin against its obligations at an average price of $20,656.88 per bitcoin—significantly lower than Bitcoin’s market closing price on June 13th, which was $22,487.39.”

The lawsuit further demands $100 million in damages for what it describes as breaches of contract, contending that “these preferential and fraudulent transfers of Bitcoin should be nullified, and the Bitcoin or its value should be restored for the benefit of Celsius’s estate.”

Tether, in its defense, has reiterated that the agreement stipulated Celsius’ obligation to “post additional collateral to prevent the liquidation of its BTC” and that “when Celsius opted not to post additional BTC, it instructed Tether to liquidate the BTC collateral held by Tether.”

Moreover, Tether emphasized that as of June 30, the consolidated equity of the Tether Group stood at nearly $12 billion, assuring that “even in the exceedingly unlikely event that this baseless lawsuit gains traction, Tether token holders will remain unaffected.”

The Celsius bankruptcy case has since concluded, following court approval of a reorganization plan in November, but the legal wrangling between Celsius and Tether signals a contentious chapter that is far from over.