Tether Reportedly Loans $1 B to Crypto Lending Platform Celsius

Bitfinex backed Tether has reportedly lent up to 1billion dollars of its asset to Circle according to a Bloomberg report
Bitfinex backed Tether has reportedly lent up to 1billion dollars of its asset to Circle according to a Bloomberg report

Tether has reportedly lent billions of dollars to cryptocurrency firms with Bitcoin as collateral, according to a Bloomberg report.

The report follows an investigation by Bloomberg’s Zeke Faux into the assets backing USD-pegged Tether’s stablecoin.

Celsius Network founder Alex Mashisnky told Bloomberg that Tether lent his company $ 1 billion at an interest rate between 5% and 6%. This asset is in addition to other companies owing Tether billions of dollars, using Bitcoin as collateral, from Faux’s report.

Celsius is a cryptocurrency borrowing and earning platform with $20 billion in total assets holdings as of August. It offers retail users with interest-bearing accounts. And it has become the recipient of several states’ securities regulators.

Last month, Celsius got a cease-and-desist order in Kentucky over interests it earned from specific cryptocurrency accounts. The regulator says that such accounts are unregistered securities. But it didn’t inform customers whether state regulation protects the earlier deposits.

To Mashisnky, Celsius’s CEO, securities regulators ought to operate in the best interest of the people who live in their jurisdiction. “And if they do,” he argues, “then they will see that the De Fi/Ce Fi system is stable. And our traditional finance system requires trillions of dollars injected every year or two to keep it going.”

The current market capitalization of Tether (USDT) is $72.6 billion, the fourth largest behind Bitcoin, Ethereum, and Cardano. In June, it led other investors during Celsius’s $ 30 billion funding round. But Tether’s backing has attracted several controversies, leading to the development of transparency regulations for dollar-based stablecoins.

According to the Bloomberg report, former Tether staff, John Betts, tagged the stablecoin “a high-rise offshore hedge fund.” John Betts, a former banker at Tether said the firm’s banking partners don’t know how much of their holdings back the stablecoins.

The investigation also says that Tether’s reserves include billions of dollars of short-term loans in Chinese companies. And that’s in line with earlier widespread rumors that Tether has a significant investment in a Chinese company.

Tether, on its part, dismissed Bloomberg’s report as “a one-part play the industry has seen many times before.” “This article does nothing more than attempt to perpetuate a false and aging story arc about Tether,” it said. “It’s another tired attempt to undermine a market leader whose track record of innovation, liquidity, and success speaks for itself.”