According to Tether, the ongoing issue with Celsius’ native cryptocurrency has nothing to do with the stablecoin operator Tether and won’t have an effect on its USDT holdings.
On Monday, Tether released a statement in response to news that prominent cryptocurrency lending site Celsius had suspended accepting withdrawals because of a purported liquidity concern.
The announcement claims that Tether’s loan to Celsius “has never had an effect” on the company’s reserves and “has always been overcollateralized” like lending to any other borrower.
The continued problems with Celsius were also referred to in the release as “an unfortunate effect of market volatility and harsh market trends.” The largest stablecoin linked to the US dollar at a 1:1 ratio, USDT, is created by the corporation.
The firm announced in a blog post on Wednesday that there have been reports floating around that its portfolio of commercial papers is “85% backed by Chinese or Asian commercial papers and being traded at a 30% discount.”
Tether vs Celsius
These accusations were described as “totally untrue” and were intended to cause “additional fear” in order to increase revenues. It said its existing portfolio of commercial paper has now been further reduced to $11 billion (from $20 billion at the end of March) and will be $8.4 billion by the end of June. It referred to its transparency reports for more information.
According to reports, Celsius used Bitcoin (BTC) as security to borrow $1 billion from Tether in 2021. The CEO and creator of Celsius, Alex Mashinsky, said that the company was paying an interest rate of between 5 and 6 percent.
Tether is notable for having invested in Celsius early on, giving the lending network $10 million in shares in 2020. However, the most recent Tether statement emphasized that the company’s investments in Celsius are unrelated to the firm.
As its native CEL cryptocurrency lost almost 50% of its value on Sunday, Celsius formally stopped all withdrawals on its platform on Monday, citing “extreme market conditions.”
Mashinsky said on Twitter the day before the collapse that the reports of users being unable to withdraw money were “FUD and misinformation.” He also said that because he was succeeding, he had many opponents.
Following this, the Bitcoin community voiced doubt about what was happening at Celsius, with some business observers speculating that the network would “collapse and take a boatload of customer money with it.”