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Tether explains how it refunded Celsius money after liquidation

Tether sold a BTC debt to Celsius "without loss." Excess money were refunded to Celsius as Tether sought to "minimize" the impact on the market.

Tether and Bitfinex CTO Paolo Ardoino said on June 15 that Tether has liquidated a loan made to Celsius "without loss." Tether has acknowledged the liquidation and stated that it "returned the remaining portion [of the loan] to Celsius."

Tether further stated that the decision to liquidate the loan was "reconfirmed in writing prior to the start of the liquidation event."

Ardoino further stated that the liquidation was "done out in such a way as to minimize... any market impact." This might have been accomplished by OTC trading, adding to a hedged position, or potentially raising the number of Bitcoins in the company's reserves.

The fact that the loan was liquidated without loss is due to the debt being 130 percent overcollateralized. This decision indicates that Tether possessed 30% more Bitcoin as collateral than the stablecoins it provided to Celsius. 

If Tether had required less collateralization, it may have suffered a loss in the present chaotic and unpredictable market. Ardoino, on the other hand, verified that the debt was liquidated when it was still over 100%. Tether would have been able to exit the trade securely even with heavy slippage because to insufficient liquidity.

Tether further promised that its exposure to Celsius via "an investment" is a "minimum part" of its equity and has no influence on Tether's reserves.

Tether's blog post also included an indicting passage aimed at overleveraged lenders. In contrast to Tether's collateralization of 130 percent,

“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.”

It concluded with a line similar to what Ardoino would tweet to his followers, declaring that "critics who allege Tether's discrepancies have no comprehension of how lending, borrowing, and risk management function."

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