Tether Says It Liquidated a Bitcoin Loan Made to Crypto Lender Celsius
Today, Tether announced that it had repaid Celsius a loan.
Although the stablecoin issuer didn’t specify the dollar amount of the loan, it stated that it had been able to settle with the crypto lender without any losses.
“This was done in order to minimize any impact on the market and in fact, after the loan was paid, Tether gave the remainder to Celsius in accordance with its agreement. Tether has not suffered any losses in the Celsius position, according to the company’s announcement.
Celsius had taken out an overcollaterized loan denominated into. Tether stated last month that it had “zero exposure” to Celsius, with the exception of a small investment from Tether equity.
Tether, the company behind USDT, is the largest stablecoin in the world. Tether’s stablecoin USDT, which is also the most traded cryptocurrency in the world, is believed to be the backbone for the crypto economy. Stablecoins are a valuable asset for traders because they can be used to trade for other crypto assets and are not tied to USD.
Rumours circulated last month that Tether’s commercial papers portfolio was ‘85% backed Chinese or Asian commercial paper and being traded at a discount of 30%’. Tether strongly denied the allegations and claimed that they were created to incite panic and generate more profits from a already stressed market.
Tether’s state-of-reserves has been a hot topic for a while now. USDT is supposed be backed with U.S. Dollars or an equivalent. However, regulators and critics have questionedwhat actually is in the issuer’s reserves.
Investors would be more concerned if Celsius, a failing cryptocurrency company, was exposed during a bear market where many other crypto platforms are struggling for survival.
According to a report by Arkham Intelligencetoday, Celsius, which once managed $10 billion in customer assets at one time, mismanaged its lending platform and executed high-risk crypto trading strategies. However, it lost $350 million in customer funds.
Tether tried to reassure its clients today by stating that it was not exposed to Celsius except for the loan, and that it has never and will not put at risk the integrity of its reserve.