On November 16, an official statement was issued by Tether in regards to denying reports of the company being exposed to two major crypto lenders.
Tether Denies Claims of Exposure
The names of these cryptocurrency lending platforms are Gemini Earn and Genesis Global. The issuer of the largest stablecoin “USDT” had to issue a statement in its defense following the rumors.
Ever since both of the lending platforms announced that they had halted withdrawals, it was being claimed that Tether was exposed to both entities.
However, Tether hopes that the official statement they have released would clarify the confusion. If Tether were to be exposed to both platforms, it would mean it had invested in both of them.
The lending firms usually form partnerships with crypto and stablecoin issuers under the table. This way, they are able to lend money to the borrowers and share their gains with the liquidity providers.
If the rumors were to be true, it would be Tether that would be acting as the liquidity provider to both lending firms.
In case both firms file for bankruptcy, then Tether would face a major setback causing it to face huge losses. In the worst-case scenario, the USDT powered by Tether may lose its dollar peg.
Genesis Global and Gemini Earn were linked as partners whereas Gemini Earn acted as the interest-bearing partner.
Tether is trying to save itself
Due to recent events, the overall crypto market is in a bad condition. This means that any entity that is found to be misleading its users or investors would be badly impacted.
Therefore, looking at the sensitivity of the matter, Tether officials have promptly issued the statement to clear themselves of the false claims.
Following the rumors, there was a great fear of contagion involving the other crypto organizations and Tether. However, Tether has announced that it has no relation with the firms whatsoever.
It has no exposure or investment made at the firms that would cause a problem in their operations or cause any kind of financial loss.
Just a few days back when the FTX exchange crashed, it caused issues for the entire cryptocurrency market.
It was not just the FTX token and the exchange that suffered from the crash but the entire crypto-verse had to pay the price.
The crash also ended up causing a problem for the USDT, causing it to de-peg for a short period of time before it rebounded.
This is the second time in the year 2022 that the USDT has lost its USD peg. The first occurrence was back in May when the Terra network crashed and the second one was after the FTX crash.
