In a statement issued Friday, Tether explained that its lending arrangement with Celsius prevented any downside risk to its underlying business. Specifically, the BTC-denominated loan issued to Celsius was overcollateralized by 130%, and the original agreement allowed Tether to liquidate the collateral to cover the loan.
"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
With the crisis unfolding in June, Tether issued a statement explaining that its portfolio investments in Celsius had nothing to do with the health and backing of USDT, the world’s largest stablecoin by market capitalization.