Tether, the creator of the USDT stablecoin, has given $1 billion to Celsius Network, a cryptocurrency lender that has enraged banking regulators in many US states.
According to Bloomberg, Celsius Network CEO Alex Mashinsky stated that the company pays Tether an interest rate of 5% to 6% as part of an examination into the stablecoin provider's reserves.
Tether was found to have borrowed billions of dollars to cryptocurrency startups using bitcoin as collateral.
In June 2020, Tether was the lead investor in Celsius Network's $30 million investment round. Celsius Network received a cease-and-desist notice from Kentucky's securities regulator last month about income earned on certain cryptocurrency accounts. The accounts, according to the regulator, breach state securities rules by failing to explain to users what happens to their deposits and if they are protected under state regulation.
Bloomberg's examination also discovered that Tether's reserves include billions of dollars in short-term loans to significant Chinese corporations, which has been widely speculated about.
“This article does nothing more than attempt to perpetuate a false and aging story arc about Tether based on innuendo and misinformation, shared by disgruntled individuals with no involvement with or direct knowledge of the business’s operations,” Tether said in a statement. “It’s another tired attempt to undermine a market leader whose track record of innovation, liquidity and success speaks for itself.”