Tether says it had liquidated a loan to Celsius without incurring any losses and that the bitcoin-denominated loan was overcollateralized by about 130%
‘Position Has Been Liquidated With No Losses’ to the Company Anthonia Isichei / CryptoPotato : Tether Liquidated an Overcollateralized Bitcoin Loan From Celsius Without Risk Liam ‘Akiba’ Wright / CryptoSlate : Tether reveals how it returned funds to Celsius following liquidation Adam Robertson / crypto.news : Tether Releases Statement Showcasing Celsius' Loan Liquidation Process Mat Di Salvo / Decrypt : Tether Says It Liquidated a Bitcoin Loan Made to Crypto Lender Celsius Uno / watcher.guru : Tether Maintains No Loss Was Recorded in Celsius Liquidation Sam Bourgi / Cointelegraph : Tether liquidates Celsius position with ‘no losses’ to stablecoin issuer Tweets: Katie Martin / @katie_martin_fx : “Tether has developed a set of risk metrics and risk measurement processes... Critics who make claims of Tether's inconsistencies clearly have no understanding of how lending, borrowing, and risk management work.” https://tether.to/... Gabor Gurbacs / @gaborgurbacs : Good to see transparency from @Tether_to on their Celsius loan liquidation process. Some facts: + The loan was denominated in BTC. + The loan was 130% over-collateralized. + Celsius position was liquidated with no losses to Tether. Source/Read: https://tether.to/... https://twitter.com/... @coloradotravis : What reputable financial institution *doesn't* end a press release with “haters are dum-dums.” https://twitter.com/... https://twitter.com/... Ben McKenzie / @ben_mckenzie : “Critics who make claims of Tether's inconsistencies clearly have no understanding of how lending, borrowing, and risk management work.” - yeah, that must be it https://tether.to/... Wu Blockchain / @wublockchain : Tether: loan that was taken out by Celsius was an overcollateralized loan denominated in BTC (130%+). The decision to liquidate the collateral to cover the loan was part of the agreement. Now Celsius position has been liquidated with no losses to Tether. https://tether.to/...
Context & Ripple Effects
Celsius had previously received a $10 million investment led by Tether, tying the lender and stablecoin issuer together before Celsius’s financial problems became visible. A reported $2 billion balance-sheet hole had already caused FTX to abandon a potential deal with Celsius.
Tether’s no-loss liquidation claim became consequential beyond the immediate loan: Celsius bankruptcy lawyers later examined Tether’s recovery of an $840 million USDT loan as an uncertain question in crypto bankruptcy law. Celsius subsequently sought to recover the bitcoin through litigation, alleging an improper sale in its 2024 clawback suit against Tether.
First-order effects
- Tether says the roughly 130% collateralization of Celsius’s bitcoin-denominated loan allowed it to close the position without a reported loss.
- Celsius loses control of the pledged bitcoin as its liquidity crisis deepens, while Tether avoids carrying the lender’s credit exposure.
Second-order effects
- The liquidation shifts the dispute from loan performance to the treatment of collateral in bankruptcy, putting Tether’s recovery under scrutiny from Celsius’s lawyers.
- Other crypto lenders and stablecoin counterparties face stronger incentives to document collateral, liquidation triggers, and borrower rights as Celsius contests the transaction.
Third-order effects
- Celsius’s later clawback action indicates that overcollateralized crypto loans can remain legally contested after liquidation, even where the lender says its exposure was fully protected.
- The episode belongs to a broader legitimacy gap in which crypto credit markets must reconcile rapid collateral enforcement with bankruptcy processes.
The trend: Crypto lending is moving toward greater legal scrutiny of collateral liquidations as bankrupt borrowers challenge counterparties’ recoveries.