The current Celsius native token crisis has nothing to do with stablecoin provider Tether and will not affect its USDT reserves, according to the company.
Tether released a statement on Monday regarding major cryptocurrency lending platform Celsius halting withdrawals due to its rumored liquidity crisis.
According to the statement, Tether’s lending activity with Celsius “has always been overcollateralized” as with any other borrower and “has no impact” on the company’s reserves.
The announcement also described the current problems with Celsius as an “unfortunate result of market volatility and extreme market conditions.”
The Tether company is the issuer of USDT, the largest stablecoin pegged to the US dollar at a 1:1 ratio. At the time of writing, USDT’s market capitalization stands at $72 billion, significantly outpacing the market value of its main competitor, Circle-backed USD coin (USDC).
In 2021, Celsius Allegedly Borrowed $1 Billion From Tether With Bitcoin (BTC) As Collateral. Celsius founder and CEO Alex Mashinsky said that Celsius was paying an interest rate of between 5% and 6%.
Tether is also known as an early investor in Celsius, contributing $10 million in equity investment to the lending platform in 2020. Tether’s latest statement underscored that the company’s investments in Celsius have nothing to do with Tether. :
“Although Tether’s investment portfolio includes an investment in the company, which represents a minimal part of our own funds, there is no correlation between this investment and our own reserves or stability.”
Celsius officially halted all withdrawals on its platform on Monday, citing “extreme market conditions” as its native CEL token lost around 50% of its value on Sunday.
The day before the crash, Mashinsky took to Twitter to claim that rumors of users being unable to withdraw funds were “FUD and misinformation.” He also wrote that he had many enemies 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 subsequently expressed skepticism about developments in Celsius, with some industry observers suggesting that the Celsius network could “crash and take a lot of money from customers.”
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