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Tether has nothing to do with Celsius Network Crisis

Updated: Aug 31, 2024
Published: Jun 13, 2022
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Amid the ongoing Celsius Network crisis leading to a serious drop in the value of its native token, Tether said that it has nothing to do with the situation and that its reserves “hold strong.”

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Tether unaffected by the Celsius crisis

On Monday, Celsius Network announced that it is halting the withdrawals, swaps, and transfers between the accounts. Tether’s latest statement comes as a sigh of relief to investors in the current panic situation. It declined all the rumors regarding its liquidity crisis and said that its lending activity with Celsius has “always been overcollateralized (as with any other borrower)” and “has no impact” on USDT reserves.

Tether, the company behind the largest stablecoin pegged to the U.S. dollar-based on a 1:1 ratio, is an early investor in Celsius. USDT issuer contributed $10 million in equity investment to the lending platform in 2020. In 2021, the latter borrowed $1 billion from the former with bitcoin as collateral. 

CEL represents a minimal part of Tether’s shareholders' equity

The latest statements read that its investments in Celsius have nothing to do with Tether and called the ongoing issues with Celsius an “unfortunate result of market volatility and extreme market conditions.” It stated:

“While Tether’s investment portfolio does include an investment in the company, representing a minimal part of our shareholders' equity, there is no correlation between this investment and our own reserves or stability.”

Earlier today, Celsius officially announced the halt of all withdrawals on its platform, citing extreme market conditions as its native token CEL lost around 50% of its value on Sunday.

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