Tether: Celsius Crisis Has No Impact on USDT Reserves

According to the company, the ongoing crisis in Celsius’ native token has nothing to do with stablecoin provider Tether and will not affect its USDT reserves.

Tether issued a statement on Monday regarding major cryptocurrency lending platform Celsius halting withdrawals amid rumors of a liquidity crisis.

According to the statement, Tether’s lending activity with Celsius has “consistently been overcollateralized” like any other borrower and has had “no impact” on the company’s reserves.

The statement also described Celsius' ongoing problems as an "unfortunate result of market volatility and extreme market conditions".

Tether Corporation is the issuer of USDT, the largest stablecoin pegged 1:1 to the U.S. dollar. At the time of writing, USDT has a market capitalization of $72 billion, significantly surpassing that of its main competitor, USDC.

Celsius reportedly borrowed $1 billion from Tether in 2021 using Bitcoin (BTC) as collateral. Celsius pays an interest rate between 5% and 6%, according to Celsius founder and CEO Alex Mashinsky.

Tether, also known as an early investor in Celsius, contributed $10 million in equity investment to the lending platform in 2020. Tether’s latest statement emphasizes that the company’s investment in Celsius has nothing to do with Tether:

“While Tether’s investment portfolio does include an investment in the company as a minimal portion of our shareholders’ equity, 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,” while its native CEL token lost about 50% of its value on Sunday.

A day before the crash, Mashinsky claimed on Twitter that rumors that users were unable to withdraw their funds were “FUD and misinformation.” He also wrote that he had many enemies because he was winning.

The Bitcoin community subsequently expressed skepticism about the Celsius incident, with some industry observers suggesting that Celsius may have "collapsed and taken a large amount of customer funds with it."