Tether Says It Liquidated a Bitcoin Loan Made to Crypto Lender Celsius
Stablecoin’s issuer claims that the loan was too collateralized and that it was liquidated in a manner that minimized the impact on the market. Tether today has announced it has repaid a loan to Celsius crypto lending company.
Although the stablecoin holder did not give a dollar amount, it stated that the lender was able to resolve the matter 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. The company announced that the Celsius position was liquidated without any losses to Tether.
Celsius, which had to stop customer withdrawals from its platform last month because it ran into financial trouble , had taken out an overcollaterized loan Tether in Bitcoin. Tether stated that it had “zero exposure” to Celsius, apart from a small Tether equity investment.
Tether, the company behind USDT, is behind the largest stablecoin in the world. The backbone of crypto economy is believed to be Tether’s token. 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 an a 30% discount”. denied the allegations and said they were created to create panic and generate additional profits in an 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, in the past critics and regulators have questioned the actual amount 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 Intelligence, Celsius, which once managed $10 billion in customer assets at one time, mismanaged its lending platform and executed “high risk leveraged crypto trading strategies” only to lose $350 millions 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.
If you want to know more about the latest news on Crypto, Blockchain and Bitcoin Visit The Daily Encrypt
