Tether Calms Fears Over Reserve Backing, Exposure To 3AC, Celsius

key takeaways

  • Tether has denied rumors that 85% of its commercial paper portfolio is backed by bad Chinese real estate debt.
  • The firm claimed that US Treasuries made up 47% of its reserves and that commercial paper amounted to less than 25%.
  • Tether also denied having any exposure to insolvent crypto lender Celsius and potentially insolvent hedge fund Three Arrows Capital.

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Stablecoin issuer Tether has dismissed rumors about the health of its commercial paper portfolio as “completely false and likely to spread to induce more panic.”

Tether condemns false backup rumors

Tether is once again refuting rumors about the backing of its USDT stablecoin.

On a wednesday morning blog post, the industry’s largest stablecoin issuer addressed rumors that its “commercial paper portfolio is 85% backed by Chinese or Asian commercial paper and trading at a 30% discount.” He said the allegations are “completely false” and are likely to be spread to induce more panic and profit.

Referring to its latest underwriting opinion from March, Tether highlighted that more than 47% of the reserves backing its USDT stablecoin were made up of US Treasuries, widely considered one of the safest financial instruments to invest in. . By contrast, commercial paper, a form of short-term unsecured corporate debt, reportedly accounted for less than 25%.

Tether CTO, Paolo Ardoino, who often acts as the main spokesperson for the company, separately fixed on Twitter that Tether had further reduced its commercial paper holdings by 50% since March 31 and that, by the end of June, its corporate debt exposure would amount to just $8.4 billion. Addressing the rumors more directly, he wrote: “It’s crazy how much FUD is doled out by interested hedge funds. [in causing] more hell to earn some extra money.”

Concerns about Tether’s commercial paper portfolio initially surfaced last December when Bloomberg released a report claiming that a significant portion of the company’s stablecoin reserves were backed by short-term debt from Chinese real estate companies. At the time, the financial markets were in a panic over the possible bankruptcy of Evergrande, the largest real estate developer in China. Tether denied having any debt to Evergrande and dismissed the report as “disinformation.”

In today’s blog post, the stablecoin provider also denied having been exposed to Capital of the three arrows, one of the most prominent hedge funds in crypto, is now rumored to be facing insolvency. He also denied having any current exposure to the now-insolvent crypto lender. Celsius, in addition to a small investment made with the capital of Tether in the company. “Celsius position has been liquidated with no loss to Tether,” the firm wrote on Wednesday, adding that its lending activities with Celsius and other borrowers have always been overcollateralized.

Despite significant market volatility in recent days, Tether’s USDT stablecoin has maintained parity with the dollar.

Disclosure: At the time of writing, the author of this article owned ETH and several other cryptocurrencies.

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