According to the company, the ongoing Celsius native token crisis has nothing to do with stablecoin provider Tether and will not affect its USDT reserves.
Tether issued a statement on Monday regarding leading cryptocurrency lending platform Celsius suspending withdrawals due to a rumored liquidity crisis.
The statement said Tether’s lending activity with Celsius, like other borrowers, was “constantly overcollateralized” and had “no impact” on the company’s reserves.
The announcement also described ongoing problems with Celsius as “an unfortunate consequence of market volatility and extreme market conditions.”
Tether is the issuer of USDT, the largest stablecoin pegged to the US dollar based on a 1:1 ratio. At the time of writing, USDT has a market capitalization of $72 billion, significantly exceeding the market value of its main competitor, Circle-backed USD Coin (USDC).
In 2021, Celsius reportedly borrowed $1 billion from Tether with Bitcoin (BTC) as collateral. Celsius founder and CEO Alex Mashinsky said Celsius pays him 5% to 6% interest.
Tether is also known as an early investor in Celsius, making a $10 million equity investment in the lending platform in 2020.
“Tether’s investment portfolio includes investments in companies and represents a minimal portion of shareholders’ equity, but there is no correlation between this investment and our own reserves or stability. .”
Celsius officially suspended all withdrawals on its platform on Monday, citing “extreme market conditions” as the native CEL token lost about 50% of its value on Sunday.
Related: Nexo offers to buy Celsius loan during exit moratorium
The day before the collapse, Mashinsky took to Twitter to claim that rumors about users being unable to withdraw their funds were “FUD and misinformation.” He also wrote that he had many opponents because he was winning.
Celsius CEO the day before the collapse pic.twitter.com/Rp2dhCmdPu
— Nate Anderson (@ClarityToast) June 13, 2022
The Bitcoin community has since expressed skepticism about the event in Celsius, along with some industry observers. suggest The Celsius network could “collapse and take a lot of money from customers,” he said.