On July 8, 2022, Tether, the world’s largest stablecoin, liquidated a loan made to crypto lender Celsius, revealing that the liquidation “caused no loss to Tether.” According to the stablecoin issuer, the bitcoin loan to Celsius was “overcollateralized” by approximately “130% or more.”
Tether Liquidates Bitcoin Loan Borrowed from Celsius – Stablecoin Issuer Stresses It Will “Never Risk the Integrity of Its Reserves”
The companyTetherhasinformedthat the company “has never and will never jeopardize the integrity of its reserves.” Tether noted on Friday that it had invested in embattled crypto lender Celsius, but that its investment was “a minimal portion of shareholders’ equity.”
The loan, denominated in Bitcoin (BTC), was taken out by Celsius, and Tether said the loan was more than 130% oversecured.” The decision to liquidate the collateral to cover the loan was part of the original terms of the agreement between the two entities and was reaffirmed in writing prior to the commencement of the liquidation event.” Tether elaborates. The issuer of the stablecoin added
This process was conducted in a manner that had the least possible impact on the market and, in fact, once the loan was covered, Tether returned the remaining portion to Celsius in accordance with the agreement; Celsius’ position was liquidated without any loss to Tether.
Stablecoin Issuer Says Tether Critics ‘Have No Understanding of How Lending, Borrowing, and Risk Management Work’
The company’s blog post adds that Tether utilizes a risk management process, stating that while “the media, critics, and community have been wrongly fixated on Tether, other lenders, including prominent figures in the field, have blatantly offered lending facilities with nearly zero collateral. Such lending practices are contrary to Tether’s philosophy and the company’s “strict regulatory practices.”
Meanwhile, the past few weeks have shown that so many crypto businesses were exposed to companies like Celsius and crypto firm Three Arrows Capital (3AC). The founder of Keefy is suing Celsius, as NFT Whale, also known as “0xb1,” has accused the company of being a “Ponzi scheme” and claims that it allowed its entire portfolio to have “naked exposure to the market.”
Additionally, this week Blockchain.com lost $270 million from 3AC’s exposure, and crypto companies such as Voyager Digital, Blockfi, Babel Finance, and Vauld have all reportedly been affected by 3AC’s financial problems.
Currently, the market capitalization of stablecoin is approximately $154 billion, with $65.9 billion worth of.USDTcontrolled by Tether. In the past 24 hours, there has been $100 billion in trading volume across the crypto market, withUSDTgaining $100 billion; USDTaccounts for $66.6 billion of that; USDT
Tether’s blog post on Celsius’ bitcoin loan highlights that the company has been vilified by critics over rumors and speculation.” Critics who claim Tether’s inconsistencies clearly do not understand how lending, borrowing, and risk management work,” concludes Tether’s blog post on Friday.
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