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SirWin
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SirWin

Tether Releases Statement Showcasing Celsius’ Loan Liquidation Process

News
Tether Releases Statement Showcasing Celsius’ Loan Liquidation Process

Tether has disclosed how it has phenomenal measures put in place to ensure that it will never risk the integrity of its reserves. The firm aims to remain in absolute transparency of its reserves.

How Tether managed to Liquidate its Loan

Tether explained, in a statement issued on Friday, that its Bitcoin (BTC)-dominated loan to Celsius Network has been fully liquidated without a loss. The company aimed to ease concerns that it may have oversized exposure to the embattled crypto lender.

The stablecoin issuer stressed that its lending arrangement with Celsius prevented any downside risk to its underlying business. Nonetheless, the loan issued to Celsius by Tether was over-collateralized by 130%. Tether had also relayed in the original agreement that it could liquidate the collateral to cover the loan.

Tether underwent the process to minimize any impact on the market as much as possible. That’s why when the firm covered the loan; it reimbursed the remaining part to Celsius as per its agreement. Tether ensured that the Celsius position could be liquidated with no losses to its reserves.

Tether maintains that its decision to liquidate the collateral to cover the loan was a part of the original terms of the agreement between the two firms and reconfirmed in writing before the genesis of the liquidation event.

Tether Remains on Toes With Celsius

Celsius’ woes began circulating last month after the crypto lender was forced to halt withdrawals because of extreme market conditions. After that, the firm began receiving details of massive losses and liquidity constraints as it rushed to hire new legal counsel to advise on reconstructing.

After Celsius’ crisis last month, Tether reacted in a statement towards its portfolio investments USDT, the world’s largest stablecoin by market capitalization, in the crypto lender. Tether stressed that its investment in Celsius had nothing to do with the health and backing of USDT.

The firm added in a statement on June 13 that although its investment portfolio includes an investment in Celsius, which represents a minimal part of its shareholder’s equity, it does not correlate its investment with its own reserves or stability.

Measure That Ensured Tether’s Endurance

Tether claims that it put up measures in place to ensure that it significantly mitigates risks while operating. In fact, the firm developed several risk metrics and risk measurement processes that let the investment and financial teams evaluate the risks of any company’s financial collaborations.

The firm’s risk culture portrays an understanding of both the business of lending and takes into account the regulatory procedures to achieve and maintain its company’s objectives.

Tether advises the crypto community concerning the recent crypto market history that it should teach everyone something. In fact, the crypto ecosystem should avoid media and critics who wrongly fixated on Tether while other lenders in the market were blatantly providing lending facilities with nearly zero collateral. 

However, it goes against the strict regulatory practice that the ecosystem has set as a standard. Tether displaced critics who claimed the firm’s inconsistencies and said they do not understand how lending, borrowing, and risk management work.