Tether, the USDT stablecoin issuer, has denied using any correlation between investment in Celsius and its stability or reserves.
Tether Calls Celsius Crisis Unfortunate, but Insists Will Not Impact USDT
The ongoing crisis concerning the Celsius token does not have anything to do with Tether. Also, it will not impact the USDT reserves, according to USDT issuer Tether. USDT is the largest stablecoin pegged to USD based on a ratio of 1:1.
Tether released a statement on Monday 13th June 2022 concerning the crypto lending platform Celsius, which has stopped withdrawals due to rumored liquidity challenges.
According to the statement by the company, Tether’s lending actions with Celsius are always overcollateralized like any other borrower. Therefore, it does not have any impact on the company’s reserves.
The announcement also referred to the current issues with Celsius as an “unfortunate result of market volatility and extreme market conditions.”
Tether was An Early Investor at Celsius
In 2021, Celsius borrowed USD1 billion from Tether using Bitcoin as collateral. According to Alex Mashinsky, the Celsius founder, they were paying an interest rate of 5-6%. Tether was also an early investor in Celsius, buying equities worth USD10 million in 2020. In its latest statement, Tether indicated that its investment in Celsius has nothing to do with Tether.
“While Tether’s investment portfolio does include an investment in the company, representing a minimal part of our shareholders’ equity, there is no correlation between this investment and our own reserves or stability,” read part of the statement from Tether.
On Monday 13th June, Celsius stopped all withdrawals on its platform, indicating that the market was experiencing extreme conditions. CEL, the native token on the Celsius network, lost 50% of its value on the previous day, Sunday.
Before the collapse, Mashinsky took to twitter to claim that information that users were unable to withdraw their funds was misinformation.
The bitcoin community has subsequently expressed skepticism about the happenings on Celsius. Some industry observers even suggested that it might collapse and sink down with customers’ money.