Court-appointed auditor Shoba Pillay submitted a nearly 700-page report to the court on Tuesday. The report is part of the bankruptcy proceedings of crypto lender Celsius. It indicates that the latter is a creditor of Tether. But the issuer of the stablecoin USDT, which also invested in the bankrupt company, does not see things the same way.
Tether challenges auditor Shoba Pillay’s report
The report filed with the court says Tether borrowed more than $2 billion from Celsius. But, the USDT issuer denies ever getting a loan from the crypto lender bankrupt. He argues that it is a “misinterpretationfrom the Celsius internal document that is cited in the report. The document in question dates from 2021 and mentions the risk of over-indebtedness that Tether represented for the crypto lender.
Paolo Ardoino, Tether’s CTO, commented on the contents of the nearly 700-page report. “The document contains an error or a typo, probably due to the workload and the pressure required to prepare this file, which led to a misinterpretation“, did he declare.
Tether’s CTO has explained : “In fact, in the document, Celsius is named as the counterparty who had to deposit additional margin, an activity which is in fact carried out by the borrower, in order to remain within the agreed risk parameters.“.
A damning report for the bankrupt crypto lender
Reviewer Shoba Pillay’s report is damning for crypto lender Celsius. Indeed, it indicates that the bankrupt crypto firm had exceeded its own safeguards to make loans to Tether. She thus ignored the risk of over-indebtedness that this would represent for her.
In addition, the internal document that the report cites mentions that it was possible that Tether did not meet its obligations. The examiner explained in his report:Celsius’ loans to Tether were twice its credit limit“.
In his report, Pillay explained:Exposure to Tether ended up surpassing $2 billion“. This amount was so large that at the end of September 2021, “this exposure was described to the risk committee as “presenting an existential risk to Celsius”“. Actually “Celsius capital is insufficient to survive a Tether default“.
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