Tether Fully Liquidates Celsius’ Bitcoin Loan With No Losses Incurred
Stablecoin issuer Tether revealed today that it has fully liquidated its Bitcoin loan to troubled cryptocurrency lending company Celsius Network with no losses incurred.
Tether Liquidates Celsius
Although Tether did not mention the size of the loan, the USDT issuer said it was overcollateralised by more than 130%. The firm further disclosed that the liquidation was part of its agreement with Celsius and that the process was executed carefully to minimise its impact on the markets.
Tether also noted that it incurred no losses, and the excess collateral was returned to the lending company.
“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. Celsius position has been liquidated with no losses to Tether,” the stablecoin issuer said.
The news helps squash concerns about Tether being overly exposed to Celsius, which has been facing trouble since last month when it halted withdrawals due to liquidity issues that stemmed from extreme market conditions. The crypto lender has made several efforts to resolve its financial challenges, including laying off some employees and hiring restructuring lawyers.
Celsius Repays Over $270M to MakerDAO
Unlike other embattled crypto firms such as Three Arrows Capital and Voyager Digital, which have filed for bankruptcy, Celsius has managed to stay in business, repaying its debts to companies it owed. Aside from Tether, Celsius Network has cleared its loans with decentralised lending protocols, including MakerDAO, Aave, and Compound.
Yesterday, Celsius repaid its entire Bitcoin loan, worth over $270 million, to MakerDAO. The repayment allows the beleaguered firm to reclaim $460 million worth of collateral from the Maker. The funds will help reduce Celsius’ liquidity constraints, and the firm is expected to resume customers’ withdrawals once it sells the assets.
Celsius Sued for Fraud
Meanwhile, as Celsius slowly resolves its financial challenges, the company has been sued by its former investment manager Jason Stone for allegedly operating a Ponzi scheme. The lawsuit claims Celsius failed to hedge against trading risks, which led to the suspension of withdrawal services.
The crypto lending company is yet to release an official statement regarding the lawsuit.
~ By William A. Frederick ~
