{"id":7118,"date":"2022-06-13T11:11:50","date_gmt":"2022-06-13T11:11:50","guid":{"rendered":"https:\/\/newmoneyreview.com\/?p=7118"},"modified":"2022-09-08T11:20:24","modified_gmt":"2022-09-08T11:20:24","slug":"stablecoins-come-unstuck-again","status":"publish","type":"post","link":"https:\/\/newmoneyreview.com\/index.php\/2022\/06\/13\/stablecoins-come-unstuck-again\/","title":{"rendered":"Stablecoins come unstuck again"},"content":{"rendered":"

The cryptocurrency market turmoil unleashed by the collapse of lending platform Celsius Network<\/a> is putting dollar stablecoins under renewed pressure.<\/p>\n

Earlier today Celsius announced that it was pausing all withdrawals, swaps and transfers between accounts \u201cdue to extreme market conditions\u201d.<\/p>\n

Tether, the leading stablecoin by market size, with $72bn in assets, saw its dollar price fall to 99.75 cents on the FTX exchange.<\/p>\n

\"\"<\/p>\n

Tether was revealed last year to have lent money to Celsius in exchange for cryptocurrency collateral.<\/p>\n

Celsius, said Bloomberg in October, had borrowed 1 billion tether tokens and was paying 5-6 percent interest on the loan. To collateralise the loan, Celsius was giving bitcoins to Tether, Bloomberg said.<\/p>\n

In May, Celsius said it had reduced its borrowing from Tether to $500m<\/a>.<\/p>\n

Tether\u2019s holdings have never been audited and the stablecoin\u2019s managers have been shown in the past to have lied repeatedly about its reserves<\/a>.<\/p>\n

The latest bout of selling pressure in Tether comes a month after the stablecoin lost its peg after the $20bn Terra stablecoin collapse<\/a>.<\/p>\n

On 12 May Tether tokens traded on the Kraken exchange as low as $0.92, eight percent below the stablecoin\u2019s target price of $1 per token.<\/p>\n

Meanwhile another recently launched stablecoin, $USDD, fell to below 98 cents (when measured in Tether) in trading today.<\/p>\n

\"\"<\/p>\n

USDD, which runs on the TRON cryptocurrency network, largely mirrored the design of the Terra stablecoin: it relied on the market value of an associated, freely floating cryptocurrency token to hold its peg.<\/p>\n

TRON\u2019s creator, Justin Sun, said earlier today that a special reserve, called TRON DAO reserve, would \u00a0deploy 2 billion USD to fight sellers.<\/p>\n

\u201cI don’t think they can last for even 24 hours. Short squeeze is coming,\u201d Sun tweeted<\/a>.<\/p>\n

The creator of the now-defunct Terra stablecoin, Do Kwon, made similar promises shortly before its demise<\/a>.<\/p>\n

Celsius\u2019s CEO, Alex Mashinsky, said yesterday<\/a> that rumours that clients were having problems withdrawing cryptocurrency from the platform were \u201cFUD and misinformation\u201d. Shortly afterwards, his platform suspended all withdrawals.<\/p>\n

Sign up here<\/a> for the New Money Review newsletter<\/em><\/p>\n

Click here<\/a> for a full list of episodes of the New Money Review podcast: the future of money in 30 minutes<\/em><\/p>\n

Related content from New Money Review<\/em><\/span><\/p>\n

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Blockchain settlement risks threaten financial system<\/a><\/p>\n

Unstable DeFi could trigger wider crash<\/a><\/p>\n

Hedge fund\/crypto cocktail could be lethal<\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The cryptocurrency market turmoil unleashed by the collapse of lending platform Celsius Network is putting dollar stablecoins under renewed pressure. 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