Tether refutes claims of exposure to Celsius, Three Arrows Capital

abdelaziz Fathi

World’s largest stablecoin issuer, Tether dismissed reports suggesting that the majority of its commercial paper portfolio is backed by Chinese or Asian securities being traded at a 30% discount.

Tether

Tether, which is closely affiliated with crypto exchange Bitfinex, has drastically reduced its holdings of commercial debt in its reserves over the last six months. Instead, the stablecoin issuer allocated most of its non-fiat reserves to Treasury bills, almost doubling assets in short-term government securities.

As it stands now, over 47% of total USD₮ reserves are US Treasuries and commercial paper makes up less than 25% of USD₮’s backing.

“These rumours are completely false and likely spread to induce further panic in order to generate additional profits from an already stressed market. Tether condemns such attempts which oftentimes see simple users take the biggest hit, while few coordinated funds increase their profits,” the statement reads.

As the company continues to face questions about what its USDT token is actually backed by, Tether has been reducing the amount of corporate debts in its reserves. In the September-December quarter, commercial papers made up nearly a third of Tether’s total holdings compared to 44% in the previous quarter.

In absolute terms, its current portfolio of commercial paper has since been further reduced to $11 billion (from $20 billion at the end of Q1 2022), and will be $8.4 billion by end June 2022. This will gradually decrease to zero without any incurrences of losses. Additionally, Tether reduced its cash assets, from $7.2 billion to $4.2 billion.

As part of its settlement with US regulators last year, Tether is required to release quarterly attestations of its assets and liabilities in order to be more transparent with its token holders over what exactly backs its stablecoin.

Has anyone seen tether’s billions?

Regarding the recent events impacting Celsius, Tether clarified that its position with the crypto lender has been liquidated with no losses. It confirmed that its lending activity with Celsius has always been overcollateralized, just as with any other borrower. As such, Tether has currently zero exposure to Celsius apart from a small investment made out of its own equity.

Tether also issued a response to a surfaced report suggesting that it has lending exposure to Three Arrows Capital. It denied the rumors, even accusing the authors of unethical motivations.

The new disclosure comes as the meltdown in other stablecoins rippled through cryptocurrency markets and pushed USDT itself below its dollar peg.

 

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