Bankrupt cryptocurrency lender Celsius Network has filed a lawsuit against San Francisco-based Archblock Inc., alleging the firm orchestrated a "multimillion-dollar fraud" by mismanaging customer funds tied to its stablecoins.
The lawsuit, lodged in the U.S. District Court for the Northern District of California, alleges that Archblock Inc. and its subsidiaries, TrustToken Inc. and TrueCoin LLC, falsely represented their TrueCurrency tokens as fully collateralized and backed by cash held in escrow. Celsius claims the firms instead funneled customer funds into speculative offshore investments, even as they continued to market the coins as risk-free.
According to court filings, Celsius minted more than $14 million worth of TrueCurrency assets, including TrueAUD, TrueCAD and TrueGBP, between 2019 and 2022. The lender said it relied on Archblock's assurances that each token was redeemable one-to-one for its fiat equivalent. When Celsius sought to redeem roughly $12.9 million in holdings during its 2023 bankruptcy process, the defendants allegedly refused, citing lost access to reserves after escrow partners Prime Trust LLC and First Digital Trust collapsed.
Archblock did not respond to a request for comment.
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Celsius after bankruptcy
Launched in 2017, Celsius was a crypto lending company. Headquartered in Hoboken, New Jersey, it allowed users to deposit cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) to the platform to earn yields or take out loans by pledging their crypto assets as security. It filed for Chapter 11 bankruptcy in July 2022.
In August 2024, Celsius filed a lawsuit against Tether, the issuer of the USDT stablecoin, accusing the stablecoin issuer of misappropriating assets and seeking $3.5 billion in Bitcoin (BTC) returns, damages, and legal fees.
Related: Crypto Price Check: Bankruptcies Taking Sector into Uncharted Waters
According to the complaint, Celsius had pledged 39,542.42 BTC as collateral for a USDT loan during its bankruptcy process. As Bitcoin's price declined, the agreement required Celsius to add more collateral to prevent liquidation. However, the filing alleges that Tether liquidated the BTC collateral prematurely, at a price that nearly covered the outstanding debt, without allowing Celsius the chance to top up its margin.
On Oct. 14, Tether agreed to pay $299.5 million to settle the lawsuit.
In May this year, its former CEO, Alexander Mashinsky, was sentenced to 12 years in prison for fraud.
Related: Chapter 11 bankrupt fintech firm floats deal to repay customers
What's happening in the market today?
At the time of writing on Oct. 22, the broader crypto market was trading in the red. Bitcoin (BTC) was down by 3.2% overnight to trade at $108,612, while Ethereum (ETH) had dropped by 4.2% to trade at $3,830.56.
XRP was trading at $2.40 after experiencing a decline of 3.3% while meme coins like Dogecoin (DOGE) and Floki (FLOKI) were down by 5% and 7.5% respectively.
Solana (SOL) experienced a similar drop of 3.5% and was trading at $184.23. This comes ahead of the Solana Breakpoint , which is scheduled for Dec. 11 - 13. Developers and investors behind the network are set to discuss new products and outline expansion plans.
This story was originally reported by TheStreet on Oct 22, 2025, where it first appeared in the Bankruptcy News & Analysis section. Add TheStreet as a Preferred Source by clicking here.
