Crypto lending platform Celsius Network has claimed that Tether is lending out new stablecoins in exchange for cryptocurrencies, FT reported.

  • Celsius Network said Tether had offered its so-called USDT units in exchange for well-known cryptocurrencies. Alex Mashinsky said that Tether would mint new assets if there is enough collateral.
  • Mashinsky said new USDT is issued for such loans, and later destroyed when the loan is closed, so the units are not permanently added to the USDT in circulation.
  • Tether has repeatedly declined to provide details on the operation of its USDT lending or to clarify whether it was issuing new tokens through its ongoing program.
  • Tether’s reserve disclosures indicate that about 4% of its total assets, equivalent to $2.5 billion, down from 12.6% earlier in the year, but the disclosures do not indicate if the loans were made by lending out USDT in return for collateral.

Tether is now facing a class-action lawsuit claiming it issued USDT without any backing in order to buy Bitcoin. BTC is up 0.90%.