Tether’s Bitcoin denominated loan for Celsius Network has been fully liquidated without a loss, easing concerns that the stablecoin issuer may have oversized exposure to the embattled crypto lender.
Tether explained that its lending arrangement with Celsius prevented any downside risk to its underlying business. The BTC-denominated loan issued to Celsius was over collateralized by 130%, and the original agreement allowed Tether to liquidate the collateral to cover the loan.
This process was carried out in a way to minimise as much as possible any impact on the markets and in fact, once the loan was covered, Tether returned the remaining part to Celsius as per its agreement.
Rumours of Celsius’ insolvency began circulating last month after the crypto lender was forced to halt withdrawals due to extreme market conditions. Details of massive losses and liquidity constraints soon trickled in as the firm hired new legal counsel to advise on restructuring. With the crisis unfolding in June, Tether issued a statement explaining that its portfolio investments in Celsius had nothing to do with the health and backing of USDT, the world’s largest stablecoin by market capitalization.
