Tether announced Monday that it has no involvement with the ongoing crisis of Celsius’ native token and affirmed that it would not impact its USDT reserves.
Celsius, a major cryptocurrency lending platform, halted its withdrawal on Monday because of its rumored liquidity crisis.
In the issued statement, Tether cleared that just with another borrower, its lending activity with Celsius has always been collateralized and will have no impact on the company’s reserves.
The company noted the ongoing issues with Celsius as an “unfortunate result of market volatility and extreme market conditions.”
USDT, which is the largest stable coin pegged to the USD on a 1:1 ratio basis, is issued by Tether. The current market capitalization, as of this writing, is $72 billion, surpassing the Circle-backed USD coin (USDC) market value, its major competitor.
According to the reports, Celsius borrowed $1 billion from Tether, keeping Bitcoin(BTC) as collateral in 2021. Alex Mashinsky, CEO of Celsius Network, stated that the company was providing an interest rate between 5% and 6%.
Tether is also among the early investors in Celsius, having contributed $10 million in equity investment to the lending platform in 2020. In the recent investment, Tether emphasized that the company’s investments in Celsius have nothing to do with its crisis.
Tether stressed that even though it does have investments in the company, which represents a minimal part of our shareholder’s equity, “there is no correlation between this investment and our own reserves or stability.”
As the value of its native CEL token fell by 50% on Sunday, the lending platform stopped all withdrawals on its platform, giving “extreme market conditions”‘ as the reason on Monday.
Interestingly, just a day before the collapse, Mashinsky took to Twitter to call the rumors of users being unable to withdraw funds “FUD and misinformation.” He also said that since he is winning he has a lot of enemies.
The Bitcoin community seems to be skeptical about the events at Celsius; some industry enthusiasts even forecast that the Celsius network will eventually collapse, taking a bunch of customer money with it.”
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2022/06/14/tether-denies-correlation-between-its-celsius-investment-usdt-reserves-amid-on-going-celsius-crisis/