According to a statement made by Tether in a press release on Friday, July 8, struggling lending platform Celsius accepted an overcollateralized loan in bitcoin from the firm (BTC).
Based on the agreed-upon parameters of the transaction, the stablecoin issuer claimed to have liquidated the loan since then.
Tether has released a statement saying, “This process was carried out in a way to minimize as much as possible any impact on the markets and in fact, once the loan was covered, Tether returned the remaining part to Celsius as per its agreement. Celsius position has been liquidated with no losses to Tether.”
The integrity of Tether's reserves has never been compromised, and it never will be. This has been repeatedly demonstrated, not only by its unwavering willingness to accept redemptions, but also by the complete openness with which its reserves are disclosed.
There is no connection between this investment and Tether's own reserves or stability, even though it does make up a small portion of its shareholder stock and is a part of the portfolio of Tether.
The Celsius-to-Tether loan was overcollateralized (130 percent or more), denominated in BTC, and the decision to liquidate the collateral to pay off the loan was spelled out in the original terms of the contract between the two parties and confirmed in writing just prior to the start of the liquidation event.
The markets' impact on this procedure was minimized to the greatest extent feasible, and once the loan was paid off, Tether repaid the remaining amount to Celsius in accordance with their agreement. The Celsius trade was liquidated without causing Tether any losses.
The investment and financial teams at Tether have established a set of risk indicators and risk assessment techniques that enable them to assess the risk of any financial transactions the company has. For the purpose of achieving and upholding its business goals, Tether's risk culture exhibits an awareness of both the lending industry and the regulatory environment.
It was further reported this week that Blockchain.com lost $270 million from 3AC exposure and crypto companies like Voyager Digital, Blockfi, Babel Finance, and Vauld were all affected by 3AC’s financial issues.
Recent cryptocurrency market history has demonstrated and should teach us that other lenders, including well-known brands in the industry, were openly offering lending facilities with practically no collateral while the media, critics, and community were mistakenly obsessed on Tether. This contravenes the stringent regulatory standards that the sector has established as the norm.
Critics who assert that Tether is inconsistent are demonstrably ignorant of how lending, borrowing, and risk management operate.
The most recent Tether upgrade is released while Celsius struggles with liquidity. According to a previous report by CryptoPotato, the cryptocurrency loan company paid Maker its final obligation of $41.2 million in DAI, releasing 21,862 WBTC (worth roughly $450 million).
On grounds of fraud and market manipulation, Celsius's former asset manager also filed a lawsuit against the company.