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.
leash published Monday’s statement regarding major cryptocurrency lending platform Celsius halting withdrawals due to rumors of a liquidity crunch.
According to the statement, Tether’s lending activity with Celsius has “always been over-collateralized” like any other borrower, and has “no impact” on the company’s reserves.
The announcement also described Celsius’ current issues as “an unfortunate result of market volatility and extreme market conditions”.
Tether is the issuer of Tether (USDT), the largest stablecoin pegged 1:1 to the US dollar. At the time of writing USDT market capitalization amounts to $72 billion, well above the market value of its main competitor, the Circle-backed dollar coin (USDC).
It is reported that in 2021 Celsius borrowed $1 billion from Tether with bitcoin as collateral. Celsius founder Alex Mashinsky said that Celsius pays an interest rate of 5% to 6%.
Tether is also known as one of the early investors in Celsius, with a $10 million equity investment in the lending platform in 2020. Tether’s latest statement highlights that the company’s investment in Celsius has nothing to do with Tether.
“While Tether’s investment portfolio includes investments in the company that represent a minimal portion of our share capital, there is no connection between these investments and our own reserves or stability.”
Celsius officially stopped all withdrawals on its platform on June 13, citing “extreme market conditions” as the native CEL token lost about 50% of its value on June 12.
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The day before the crash, Celsius CEO Mashinsky tweeted that the rumors about users being unable to withdraw funds were “FUD and disinformation.” He also wrote that he had many enemies because he was victorious.
Celsius CEO the day before the crash pic.twitter.com/Rp2dhCmdPu
— Nate Anderson (@ClarityToast) June 13, 2022
The bitcoin community subsequently expressed skepticism about the developments in Celsius, with some industry observers sentence that the Celsius network could “collapse and take a ton of customer money with it.”
Credit : cointelegraph.com