Health and Backing of Tether (USDT) Sustained by their Financial Metrics

Tether works with risk metrics.  They have financial teams who decide on the financial risk measurement process.  The financial interactions of the company are evaluated by the risk management team. Tether takes into consideration the regulatory landscape when they get into transactional activities related to their business.

They work with a clear understanding of how lending, borrowing and risk management works. Recently, financial services who blatantly extended lending facilities with near zero collateral were not able to sustain themselves.  The recent cryptocurrency market history is proof of it.  The financial industry would not be able to sustain itself without due collateral in the lending process and regulations make this very clear.

Tether recently points to how their portfolio investment did have Celsius, which is a very small part of the shareholder’s equity.

“There is no correlation between this investment and Tether’s own reserves or stability.”

Elaborating on the loan, it has been stated that, the Tether loan, which was taken out by Celsius was an overcollateralized loan, which was denominated in BTC (130%+).  Thus, the decision to liquidate the collateral to provide for a loan was a part of the original terms of the agreement between the two entities (Tether and Celsius).  These facts have been reconfirmed in writing before the start of the liquidation event.

Tether clarifies that this has taken place in a way to minimize impact on the markets. Once the loan was covered, Tether returned the remaining part to Celsius per its agreement. The position of Celsius has been liquidated with no losses to Tether.

Thus, the Tether Bitcoin (BTC) denominated loan to Celsius Network has been completely liquidated without any loss. Since the BTC denominated loan to Celsius has been over-collateralized by 130% there was no downside risk to its underlying business.  The terms of the original agreement helped Tether to liquidate the collateral to cover the loan.

Paolo Ardoino expressed:  “This process was carried out in a way to minimize 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.”

Extreme market conditions recently triggered rumours about Celsius Insolvency. Celsius recently hired a new legal counsel about restricting the company and this further fired up the rumor.

Under these rumor-filled circumstances, Tether liquidated their position with Celsius. Tether has made it very clear that their investments in Celsius has nothing to do with the health and backing of USDT.