Tether has reassured investors and members of its community that the recent loan liquidation by the embattled crypto firm, Celsius Network, has no negative impact on its reserves.
According to the statement, the company is focused on the protection of investors’ funds and this includes safeguarding the integrity of its reserves without compromise.
This principle was never undermined in the process of investing in Celsius, the company maintained
The company also restated that its investment in Celsius represents a small part of its shareholders’ equity.
Per the statement,
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.
Tether’s statement also said the firm had developed risk measurement processes that allow it to properly assess its financial decisions.
Recall that Celsius, a foremost crypto lending company, is currently battling issues of liquidity. The firm’s trouble began in the recent crypto market meltdown that saw the collapse of the Terra ecosystem and Bitcoin price going under $20,000.
To avoid a total shutdown, the company has been repaying its loans, liquidating numerous assets in the process.
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A tweet by the company’s Chief Technical Officer, Paolo Ardoino, also indicated that the process was designed to have minimal impacts on the market.
“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,” Ardoino said. “Celsius position has been liquidated with no losses to Tether.”
Tether has increasingly faced questions from the crypto community over its investment in Celsius and about its reserve. The company, however, has maintained that it remained in good shape despite the market downturn.
Tether remains the dominant stabelcoin in the crypto industry despite the rapid growth of other competitors. USDT has a circulating supply of $66 billion, while its closest competitor, USDC has a supply of $55 billion.