Stablecoin provider Tether hit out at "rumors" about its holdings of commercial paper, a form of short-term corporate debt, while distancing itself from troubled lender Celsius and crypto hedge fund Three Arrows Capital. 

The tether stablcoin, often known by its ticker USDT, is the biggest in the crypto market. Tether maintains the value of its centralized stablecoin against the US dollar by using a basket of assets, including corporate debt, US Treasury bills and some cash reserves.

In a blog post on Wednesday, the company wrote that rumors had been circulating that its commercial paper portfolio is "85% backed by Chinese or Asian commercial papers and being traded at a 30% discount."

It called these allegations "completely false," adding that they are likely to induce "further panic" to generate profits. It referred to its transparency disclosures for further information and said its current portfolio of commercial paper has since been further reduced to $11 billion (from $20 billion at the end of March) and will be $8.4 billion by the end of June.

In May, Tether reported that it had reduced its commercial paper to $19.9 billion from $24.2 billion the previous quarter, a 17% decrease. It also added US Treasury bills, increasing them to $39.2 billion from $34.5 billion. 

Bloomberg said last October said that much of Tether’s commercial paper had been issued by big Chinese companies, causing some analysts to question the quality of the reserves. Tether has refrained from disclosing the names of those firms.

The ubiquitous stablecoin provider also denied on Wednesday that it has lending exposure to Three Arrows Capital, which is currently struggling to avoid potential insolvency after being liquidated by its lenders, as per earlier reports by The Block.

Tether added that its Celsius position has been liquidated with no losses, and that its position in regard to the crypto lender has always been over-collatoralized.