CTO of Tether denies borrowing from bankrupt cryptocurrency lender Celsius

A typo or mischaracterization was found in the bankruptcy report by court-appointed examiner Shoba Pillay, according to Tether's chief technology officer.

Tether (USDT), the world’s largest stablecoin by market capitalization, has never received a loan from the bankrupt cryptocurrency lender Celsius, according to its chief technology officer.

The chief technology officer of Tether and Bitfinex crypto exchange, Paolo Ardoino, announced on Jan. 31 that Tether had never borrowed from Celsius.

The tweet was in response to the Celsius bankruptcy examiner report, which incorrectly implied that Tether was one of Celsius’ borrowers alongside firms like Three Arrows Capital, which borrowed $75 million from the company.

The Jan. 31 examiner report noted on page 183 that Celsius’ loans to Tether were twice its credit limit.

“Tether’s exposure eventually grew to over $2 billion,” which became an issue in late September 2021 when the risk committee described it as an “existential risk.”

In denying any exposure to Celsius, Ardoino suggested examiner Shoba Pillay mixed up prepositions in the report, which actually meant “Celsius loans to Tether” rather than “Celsius loans to Tether.”

“It’s either a typo or a mischaracterization,” Tether’s chief technology officer wrote in a tweet started by Financial Times reporter Kadhim Shubber.

Shubber also stated that the examiner’s report is associated with some level of miscomprehension:

“The examiner’s report above mentions Celsius having ‘loans’ from Tether, but I believe the exposure stems from Celsius posting collateral in excess of the amounts it borrowed.”

It was reported previously that Celsius borrowed $1 billion from Tether in 2021 using Bitcoin (BTC). According to Celsius founder Alex Mashinsky, the company paid an interest rate of between 5% and 6%. About a month after Celsius stopped withdrawing funds, Tether liquidated the $900 million loan in June 2022.

The loan amount was much greater than $1 billion, according to the latest examiner report. The examiner Shubber wrote that Celsius had borrowed $1.823 billion from Tether in the stablecoin USDT and posted $2.612 billion of assets under management as collateral, accounting for 17% of Celsius’ assets.

Besides providing massive loans to Celsius, Tether was an early investor in the bankrupt company. In 2020, Celsius secured a $10 million equity raise from Tether, which Mashinsky deemed important.