Tether did not take loans from bankrupt Celsius
2023.02.01 08:34
Tether did not take loans from bankrupt Celsius
By Tiffany Smith
Budrigannews.com – The company behind Tether (USDT), the world’s largest stablecoin by market capitalization, has never received a loan from Celsius, the bankrupt cryptocurrency lender, according to its chief technology officer.
On January 31, Tether and Bitfinex’s chief technology officer Paolo Ardoino stated on Twitter that Tether had “never borrowed from Celsius.”
The tweet was sent in response to the Celsius bankruptcy examiner’s report, which allegedly stated incorrectly that Tether and companies like Three Arrows Capital, which borrowed $75 million from Celsius, were among the company’s borrowers.
On page 183 of the examiner report, which was published on January 31, it was stated that “Celsius’s loans to Tether were twice its credit limit.”
According to the report, “Tether’s exposure eventually grew to over $2 billion.” This became a problem in late September 2021 when Celsius was told by the risk committee that it posed an “existential risk.”
Ardoino suggested that examiner Shoba Pillay misinterpreted prepositions in the examiner’s report, meaning “Celsius loans from Tether” rather than “Celsius loans to Tether,” denying any exposure to troubled Celsius.
In a Twitter thread started by Financial Times reporter Kadhim Shubber, Tether’s chief technology officer wrote, “Either is a typo or a mischaracterization.”
Additionally, Shubber stated that the examiner report is associated with some degree of misinterpretation, stating:
“I think the exposure comes from Celsius having posted collateral in excess of the amounts it borrowed from Tether,” the examiner wrote. “The examiner’s report above describes Celsius having “loans” to Tether.”
In 2021, Celsius allegedly borrowed $1 billion from Tether using Bitcoin (BTC), as previously reported. According to Alex Mashinsky, the founder of Celsius, the company was incurring interest at rates ranging from 5% to 6%. Tether stated that it liquidated the $900 million loan in June 2022, approximately one month after Celsius halted withdrawals.
The most recent examiner report indicates that the loan amount was significantly higher than $1 billion. Examiner Shubber wrote, “Celtic had borrowed $1.823 billion of the stablecoin USDT from Tether, posting as collateral $2.612 billion of its assets under management,” noting that the collateral represented 17% of Celsius’s total assets.
Tether is known for being an early investor in Celsius, in addition to making substantial loans to the company. Mashinsky referred to the $10 million equity raise Celsius received from Tether in 2020 as a significant endorsement from the company.
