The company stated that the current crisis of Calcius has nothing to do with Tether, the stable coin.
Tether released a statement on Monday in response to the news that the large cryptocurrency lending platform Celsius has suspended withdrawals owing to a purported liquidity concern.
According to the statement, tether’s lending activity with Celsius, as with any other borrower, has “always been over collateralised” and “had no impact” on the company’s reserves.
Tether (USDT) is the largest stable coin tied to the US dollar at a 1:1 ratio. USDT has a market valuation of $72 billion at the time of writing, far above its main competitor, the Circle-backed USD currency (USDC).
Celsius is said to have borrowed $1 billion from Tether in 2021, using Bitcoin as security. Alex Mashinsky, the founder of Celsius, stated that the company was paying a 5% to 6% interest rate.
Tether is also noted for being an early investor in Celsius, having invested $10 million in the lending platform in 2020. Tether’s most recent announcement clarified that its investments in Celsius are unrelated to Tether.
“While Tether’s investment portfolio includes a small stake in the company, there is no link between this investment and our own reserves or stability.”
On June 13, Celsius formally banned all withdrawals on its platform, claiming “extreme market conditions” after its native CEL cryptocurrency fell over 50% of its value on June 12.
According to CoinMarketCap data, the price of Celsius’ native token (CEL) dropped more than 50% following the recent temporary withdrawal halt and was trading at roughly $0.197 at the time of writing. The reduction in the value of the Celsius token is part of a more considerable crypto market downturn. Bitcoin was trading around $23,845, while ETH hit a record low of $1,213.
“Our ultimate goal is to restore withdrawals, Swaps, and account transfers as rapidly as possible to stabilise liquidity.” As we explore numerous solutions, we will have a lot of work ahead of us; this process will take time, and there may be delays.” stated the Monday memo.
Tether Claims That Its Investment Relationship With Celsius Has Not Been Disrupted
Users’ monies, including Tether (USDT) assets, were frozen Celsius due to uncertain market conditions that liquidated billions of dollars on arrival. Tether, a significant investor in Celsius, tried to clarify its position in the face of rising concerns.
According to the company, tether’s participation in the crypto lender had no impact on the company’s reserves or stability. The company’s lending activity with the Celsius network “has always been over collateralised and has no impact on their reserves,” according to the stable coin issuer, which has four stable coins pegged to the dollar, euro, yuan, and Mexican peso.
It also stated that its investment in the lending platform represents only a tiny fraction of its shareholders’ capital.
Nexo Is Buying Celsius Network
Following the developments on Celsius, another leading cryptocurrency loan site, Nexo, has announced plans to acquire its competitor. Nexo and its partners and affiliates have written an open letter to Celsius expressing interest in buying assets to help the distressed company. The collateralised loan portfolio, brand assets, and company customer database are among these assets.
The letter does not include a purchase price, but it states that if the letter is accepted, the corporation is prepared to begin discussions.