Tether Denies Rumors On Its Commercial Paper Holdings & Exposure to Celsius. Tether, a stable coin provider, has denied “rumors” that it holds commercial paper, a type of short-term corporate debt, and has attempted to distance itself from struggling lender Celsius and crypto hedge fund Three Arrows Capital.
The rumors claimed that Chinese or Asian commercial papers made up 85% of the firm’s commercial paper portfolio and were being traded at a 30% discount.
In the June 15 statement, the Tether said:
It called the allegations “completely false” and predicted that they would cause “further panic” to generate profits. The company stated it has lowered its commercial paper portfolio from $20 billion at the end of March to $11 billion now and expects it to be $8.4 billion by the end of June, citing its transparency disclosures for more details
Tether reported in May that it had reduced its commercial paper by 17% to $19.9 billion, down from $24.2 billion the previous quarter. In addition, the amount of US Treasury bills increased from $34.5 billion to $39.2 billion.
Tether Denies Any Exposures To Celsius
The company also disputed claims that it had lending exposures to Celsius and Three Arrows Capital, deeming such rumors “categorically false.”
Tether clarified that its position with the crypto lender, Celsius, has been liquidated with no losses. It confirmed that, like any other borrower, its lending activity with Celsius has always been overcollateralized. As a result, Tether currently has no exposure to Celsius other than a small investment made with its own funds.
Tether also responded to a report that suggested it had lending exposure to Three Arrows Capital. It denied the rumors and even accused the authors of unethical motives. The new disclosure comes as the collapse of other stable coins has reverberated through cryptocurrency markets, pushing USDT below its dollar peg.
Tether, which is closely associated with the cryptocurrency exchange Bitfinex, has drastically reduced its commercial debt holdings in its reserves over the last six months. Instead, the stablecoin issuer directed the majority of its non-fiat reserves to Treasury bills, nearly tripling its holdings in short-term government securities.
Currently, US Treasuries account for more than 47 percent of total USDT reserves, while commercial paper accounts for less than 25 percent of USDT backing.
Tron’s algorithmic stable coin USDD, unlike the USDT, has remained depegged since Monday. Other stable coins such as Binance USD, TUSD, and USDN also experienced similar changes in price as the extreme sell-off continued in the crypto market.
Tether CTO Paolo Ardoino, who frequently serves as the company’s primary spokesman, stated separately on Twitter that Tether had reduced its commercial paper holdings by 50% since March 31 and that its exposure to corporate debt would be only $8.4 billion by the end of June. In a more direct response to the rumours, he wrote, “It’s insane how much FUD is spread by hedge funds interested [in causing] further hell to make some extra bucks.”
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