Tether Confirms No Losses in Celsius Liquidation: Addressing Concerns
Concerns within the crypto community regarding Tether's exposure to Celsius Network can be put to rest. The world’s largest stablecoin issuer, Tether, has announced that the loan taken out by embattled crypto lender Celsius has been fully liquidated without a loss.
Tether has increasingly faced questions from the crypto community over its investment in Celsius. To address these concerns, The company behind the stablecoin Tether on Friday unveiled fresh details around its loan to embattled crypto lender Celsius, stating the margin calls and ensuing “Celsius position has been liquidated with no losses to Tether.” This confirmation directly refutes any speculation of significant financial impact stemming from Celsius's bankruptcy proceedings.
Tether said it issued a bitcoin-denominated loan to Celsius that was overcollateralized to the tune of about 130%. This overcollateralization acted as a buffer, protecting Tether from potential losses during the liquidation process. The issuer of the tether stablecoin (USDT) said Tether has given a BTC-backed loan to Celsius Holdings, which has been facing major problems due to the bear market.
Tether's statement clarifies that Tether’s Bitcoin -denominated loan to Celsius Network has been fully liquidated without a loss, easing concerns that the stablecoin issuer may have oversized exposure to the struggling crypto lender. A lot of companies and projects invested in Celsius, leading to widespread concern, but Tether’s proactive risk management strategy appears to have mitigated potential negative effects.
Tether has developed a set of risk metrics and risk measurement processes, which allows the investment team to effectively manage its exposure and ensure the stability of the USDT stablecoin. The confirmation that “Celsius position has been liquidated with no losses to Tether” underscores the effectiveness of these risk management protocols and provides reassurance to USDT holders and the wider crypto market.