Tether Limited, the company behind the USDT stablecoin, liquidated its position in the Celsius Network protocol last Friday (8). With this, the company eliminated the protocol risk for its dollar reserves. According to the official press release, Celsius received an over-secured loan from the company, denominated in Bitcoin (BTC). In this case, the guarantees exceeded by 130% the total amount requested by the loan company. Tether said it settled the loan based on the agreed terms of the transaction. That is, Celsius paid the amount made available by the loan and, in return, received back the guarantee given. “This process was carried out in such a way as to minimize any impact on the markets as much as possible and, in fact, once the loan was covered, Tether returned the remaining part to Celsius as per their agreement. The Celsius position was liquidated without loss to Tether,” Tether said.
Investment in Celsius
The statement also confirmed that the company had some investment in Celsius, but did not reveal the exact amount. However, Tether assured that it represents a “minimal part of its net worth” and that the company’s problems did not affect Tether’s reserves or stability. The latest Tether update comes as Celsius is experiencing liquidity issues. As reported by CriptoFácil, the lending platform blocked the withdrawals of its users on June 13, due to problems with the liquidity of its funds. Apparently, the protocol took out large loans offering BTC as collateral. But when the price of cryptocurrency dropped, it became difficult to pay off debts. Simultaneously, users feared for further dips and began cashing out, further damaging Celsius’ liquidity. More recently, the company paid off its final debt of BRL 222 million in DAI to the Maker protocol, causing a release of 21,862 Wraped Bitcoin (WBTC). The amount corresponded to approximately R$ 2.4 billion in current values. On the other hand, neither Tether nor Celsius revealed how much BTC was released after this loan was paid off. But the expectation is that the regularization of the company’s finances will speed up the release of withdrawals, paralyzed for almost a month.
Security measures
In the statement, Tether ends by talking about the security measures taken to mediate loan risks. In this sense, the company claims to respect both market risks and regulatory aspects. “Tether has developed a set of risk metrics and risk measurement processes that enable investment and finance teams to assess the risk of any of the firm’s financial interactions. Tether’s risk culture demonstrates an understanding of both the lending business and the regulatory landscape in order to achieve and sustain its business objectives. Also Read: Yuga Labs Begins Metaverse Otherside Tests Also Read: Binance CEO Predicts DEXs Will Overtake CEXs In Next 10 Years hours
