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Thursday, April 25, 2024

Revelations on Tether (USDT), Celsius threatened?

Bitcoin (BTC) isn’t the only one in the cryptosphere’s spotlight. The stablecoin Tether (USDT), leader of the sector, is at the heart of the news and may need to be more transparent about the assets that make up its reserves.

The shock investigation of Tether

Bloomberg launched the shock wave on Tether stablecoin with a survey titled “Anyone seen Tether’s billions? “ . To conduct this investigation, the Bloomberg reporter went to Taiwan and Puerto Rico , via the French Riviera , China and the Bahamas , to trace all of Tether’s activities. This unprecedented scale survey raises questions about the reality of the reserves supposed to support the company’s liquidity.

Indeed, this year Tether issued 48 billion USDT , bringing the total to 69 billion USDT in circulation. Assuming Tether actually has $ 69 billion in reserves, that would make it one of America’s 50 biggest banks. This element concerns the financial regulators s who fear a loss to liquidation Tether’s assets in case of simultaneous withdrawal of USDT by several operators.

These losses could have serious repercussions on the short-term debt market , even leading to its collapse. In fact, a former banker at a Puerto Rican bank used by Tether, John Betts , called the USDT a “  high-risk offshore hedge fund  ”. (Also check: How Bitcoin would save 30% of its GDP in Tonga)

Some of the risks mentioned are linked to the composition of Tether reserves. As we have already mentioned, Tether’s reserves include a large part of commercial papers . These short-term debt securities issued by companies are particularly sensitive to the vagaries of the market. And Tether owns $ 30 billion in this type of financial security.

As a result, Tether would be one of the top 10 holders of commercial paper in the world, even rivaling the Vanguard Group , the world’s number 2 in asset management.

Celsius Network borrowed USDT from Tether

Celsius Network is a lending platform allowing you to borrow assets, but also to generate passive income. According to company data, it has increased its total volume of digital assets by 20 times , from $ 1 billion to over $ 20 billion. (Bitcoin (BTC) Price Manipulation – Class Action Against Bitfinex (USDT) Poorly Engaged)

Additionally, Bloomberg’s investigation found that Celsius Network borrowed $ 1 billion from Tether, at an interest rate of between 5% and 6% . Faced with this revelation, on October 7, Celsius Network CEO Alex Mashinsky confirmed that his company did indeed borrow USDT from Tether, not the US dollar.

In addition, Celsius Network was pinned last month by the Kentucky securities regulator in the United States over its lending account offers . Kentucky joins the states of Alabama, New Jersey and Texas which previously censored lending products offered by Celsius Network. (Multiplication of blockchains: the new DeFi paradigm)

These revelations are puzzling over the future of Tether. It is quite likely that financial regulators will soon be looking very closely at the possibility of regulating the companies issuing stablecoins , on the model of banking institutions.

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