the staff of the Ridgewood blog
Ridgewood NJ, Stablecoin issuer Tether faces scrutiny over an $840mn loan it recovered from Celsius Network as the crypto lender’s bankruptcy tests how insolvency rules apply to digital assets.
Tether recovered an $840 million loan to Celsius by selling the bitcoin Celsius pledged as collateral before it filed for bankruptcy. Celsius’ lawyers are now questioning in court whether Celsius can recover the value of the loan as the liquidation was made within 90 days of the filing. This area of bankruptcy law is unclear and the answer could affect Tether’s reserves.
Collateral….something pledged as security for repayment of a loan, to be forfeited in the event of a default