- Paolo Ardoino, the Chief Technology Officer of Tether, denied any loan arrangement with the bankrupt cryptocurrency lender, Celsius, through a tweet in response to the Celsius bankruptcy examiner report.
- The examiner report stated that Tether was one of Celsius’ debtors and had borrowed over $2 billion, which posed an existential risk to Celsius.
- Instead of loans to Tether, Celsius had exposure from posting collateral exceeding their borrowed amounts from Tether.
Tether, a leading stablecoin provider, has been making headlines lately for its supposed relationship with Celsius, the cryptocurrency lending platform that recently filed for bankruptcy. The issue arose from a bankruptcy examiner report that suggested Tether was among Celsius’ debtors and had borrowed from the lender.
The bankruptcy examiner report, released on January 31, stated that Tether’s exposure to Celsius had reached more than $2 billion and was described as an “existential risk” for the lender. Paolo Ardoino, Tether’s Chief Technology Officer, has taken to Twitter to dismiss these claims and clarify the matter.
Shoba Pillay Mistakenly Asserts Tether as Debtor
In a Twitter thread, Ardoino denies exposure to Celsius and suggests that the examiner, Shoba Pillay, mixed up prepositions within the report. In a Twitter thread initiated by Financial Times reporter Kadhim Shubber, Ardoino mentioned that the information was either a typo or a miscomprehension.
Shubber furthered this notion and stated that it is not Celsius having loans to Tether, as stated in the examiner report. Instead, he explained, that Celsius’s exposure came from posting collateral exceeding their borrowed amounts from Tether. The wording in the examiner’s document made the situation out in the reverse of reality.
Celsius had borrowed about $1 billion from Tether with Bitcoin and paid a rate of interest between 5% and 6%. In June 2022, Tether announced that it had liquidated its $900 million loan to Celsius, just one month after the lender halted withdrawals.
The latest examiner report uncovered that the loan amount was over $1 billion. Celsius had borrowed $1.823 billion USDT from Tether and used collateral worth $2.612 billion, comprising 17% of all its assets under management.
Tether’s past involvement with Celsius
Tether is also noted for being an early investor in Celsius, with the lender receiving a $10 million equity raise from Tether in 2020. Celsius founder, Alex Mashinsky, described it as a crucial endorsement. However, despite Tether’s investment in Celsius, Ardoino denies loan arrangements between the two companies.
Celsius filed for bankruptcy in November 2022, citing the lack of funds to repay its customers. The platform, which claimed to have over 500,000 customers, had been a popular option for those looking to earn interest on their crypto holdings. The bankruptcy case has brought to light the fragility of the crypto lending sector and the risks associated with these platforms.
The denial by Tether’s CTO regarding the company’s exposure to Celsius is a significant development in the ongoing bankruptcy case. The examiner report caused a stir in the crypto community, with many speculating about Tether’s involvement with Celsius. The clarification provided by Ardoino helps to dispel any rumors and provides a clearer picture of the situation.
The crypto community has been closely following the developments in the Celsius bankruptcy case. Stablecoin providers and other crypto companies need to be transparent in their dealings, as trust is a crucial factor in the success of the crypto industry. Tether’s swift response to the examiner report helps to restore confidence in the company and its stablecoin, USDT.
