Tether has liquidated a bitcoin loan to Celsius. The latter is in financial dire-straits. According to Paolo Ardoino, CTO at Tether, it was a loan with sufficient collateral.
Tether sold the bitcoin they received. The cover ensured that. According to Tether, there was even some of the collateral left. They said they returned that to Celsius.
Tether & Celsius
Celsius is one of the crypto companies that simply cannot pay its bills anymore. After recent market developments and disastrous decisions (and promises), several parties can whistle for their money. Tether entered into a loan with Celsius using bitcoin as collateral, thus limiting its losses.
For the picture: there is over $65 billion (!) of Tether in circulation. These are tokens that have to follow the value of the dollar as closely as possible. In the world of stablecoins you have Tether, and behind it you have competitor USDC. Several challengers have gone out of business over the years. Tether is holding its own so far.
Stablecoins are not a necessary part of the ecosystem. However, it is clear that trading pairs with bitcoin and tether are by far the most popular on the major crypto exchanges. It is an important part of (day) trading.
"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." https://t.co/K1cBkaQWWI
— Paolo Ardoino (@paoloardoino) July 8, 2022
How much money is involved?
It is unclear exactly how much money is involved. According to Tether, they did not suffer any losses. In a statement, the company indicates that they only had exposure to Celsius in the form of the loan.
An idea like Tether stands or falls on trust. Customers should always be able to turn in their Tether for ‘real’ dollars. Until now, this has always been the case. At the same time, small stories like this do create suspicion.
Tether is the largest stablecoin and has actually been under fire since its inception. It is still not clear how and where exactly those tens of billions of dollars are covered. It must be a combination of all kinds of different financial products.
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Ivan Brightly is a leading cryptocurrency analyst and author with over 5 years of experience in the blockchain and digital asset space. He previously served as a senior analyst at a major cryptocurrency hedge fund where he led quantitative research and trading strategy development.
Ivan holds a Master's degree in Finance from the London School of Economics and a Bachelor's in Computer Science from Stanford University. He is frequently invited to speak at fintech and blockchain conferences worldwide on topics spanning cryptocurrency trading, blockchain technology, and the future of digital assets.
Ivan's commentary has been featured in several major finance and technology publications including Forbes, Bloomberg, and CoinDesk. He is considered one of the most insightful voices analyzing new developments in the cryptocurrency and blockchain industry.
