Tether Discloses Celsius' Loan Liquidation Process
Tether has never and will never put the integrity of its reserves at risk. This has been proven time and time again not only by its ability to never refuse a redemption but also in the absolute transparency of its reserves.
While Tether’s portfolio does include an investment in Celsius, representing a minimal part of its shareholder’s equity, there is no correlation between this investment and Tether’s own reserves or stability. The Tether loan that was taken out by Celsius was an overcollateralized loan denominated in BTC (130%+), and the decision to liquidate the collateral to cover the loan was a part of the original terms of the agreement between the two entities and reconfirmed in writing before the start of the liquidation event. 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.
Tether has developed a set of risk metrics and risk measurement processes, which allows the investment and financial teams to evaluate the risk of any of the company’s financial interactions. Tether's risk culture demonstrates an understanding of both the business of lending and takes into account the regulatory landscape in order to achieve and maintain its business objectives.
Recent crypto market history has shown and should teach us, that while the media, critics and community were wrongly fixated on Tether, other lenders including notable names in the space were blatantly providing lending facilities with nearly zero collateral. This goes against the strict regulatory practice that the industry has set as standard.
Critics who make claims of Tether’s inconsistencies clearly have no understanding of how lending, borrowing, and risk management work.
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