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Stablecoin provider Tether has responded to “rumors” about its holdings of commercial paper, a form of short-term corporate debt, while distancing itself from troubled lender Celsius and cryptocurrency hedge fund Three Arrows Capital.
The Tether stablecoin, known by the ticker symbol USDT, is the largest in the crypto market. Tether maintains the value of its centralized stablecoin against the U.S. dollar using a basket of assets, including corporate debt, U.S. Treasury bills, and some cash reserves.
In a blog post on Wednesday, the company wrote that there were rumors that its portfolio of commercial papers was “85% backed by Chinese or Asian commercial paper and trading at a 30% discount.”
The company called the allegations “completely false,” adding that they could cause “further panic” for profit. The firm cited transparency disclosures for more information and said its current portfolio of commercial paper has since been further reduced to $11 billion (from $20 billion at the end of March) and will be $8.4 billion by the end of June.
In May, Tether said it had cut its commercial paper to $19.9 billion from $24.2 billion in the previous quarter, down 17%. He also added U.S. Treasury bills, increasing them to $39.2 billion from $34.5 billion.
Bloomberg reported that in October last year, most of Tether’s commercial paper was issued by major Chinese companies, which led some analysts to question the quality of reserves. Tether refrained from disclosing the names of these firms.
The stablecoin provider also denied Wednesday that it was lending to Three Arrows Capital, which is currently struggling to avoid potential insolvency after liquidation by its creditors.
Tether added that its position on Celsius has been eliminated without loss and that its stance on the crypto lender has always been overstated.
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