Tether Refutes Rumors Surrounding Stablecoin Backing

Tether has categorically denied rumors about its commercial paper holdings, claiming they are being spread to induce panic and generate profits.

Tether addressed the claim that its commercial paper portfolio is 85% backed by Chinese or Asian commercial papers, which were being traded at a 30% discount, in a blog post on the company’s website. 

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

According to Tether, over 47% of total USD₮ reserves are U.S. Treasuries, whereas commercial paper only makes up less than 25% of USD₮’s backing. The company said that while its portfolio of commercial paper had been $20 billion at the end of Q1 2022, it had since been reduced to $11 billion.

Tether added that this will shrink further to $8.4 billion by the end of June, before gradually decreasing to zero “without any incurrences of losses,” as expiring commercial papers “will be rolled into U.S. Treasuries with a short maturity.”

Celsius connection

The announcement also addressed Tether’s involvement with the Celsius lending platform, which recently contributed to difficulties in the crypto markets after suspending withdrawals earlier this week.

Tether reported liquidating its position with Celsius, while incurring no losses, due to having been over collateralized. Apart from a small investment made out of Tether equity in the company, Tether reported having zero exposure to Celsius.

The suspension of withdrawals at Celsius comes after a number of analysts predicted that the lender was suffering from liquidity issues. Celsius market capitalization had sunk $290 million in May, even before the withdrawal freezes.

CEL closed May with a market capitalization of approximately $199.8 million, according to Be[In]Crypto research. This was a 59% drop from the opening day of May’s market value.

The post Tether Refutes Rumors Surrounding Stablecoin Backing appeared first on BeInCrypto.

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