“Tether Is Proven with Fire” CTO Responds As Hedge Funds Reportedly Work to Short USDT
The Wall Street Journal reported an increase in the number of hedge funds opening short positions worth hundreds of millions of dollars against Tether (USDT) in the past month. Paolo Ardoino, the CTO at Tether, commented that traditional hedge funds have joined retail traders in shorting USDT.
Terra’s Crash Drowning Other Stablecoins
Though some investors have been shorting USDT for the past year already, the number doing so has significantly increased in the wake of the crash of the previously titan stablecoin Terra (UST), the value of which slumped 99% in May. Now, it seems hedge funds are joining the fray against Tether.
The crash of the Terra ecosystem wiped out billions worth of investors’ positions, and shook the entire crypto industry. Indeed, the waves caused by the collapse of the algorithm-based UST stablecoin dragged Tethers down with it, seeing it de-peg below the $1 benchmark to $0.97, before it recovered.
Last month, Tether hit back at rumors of its own impending failure by providing an assurance report, which proved that its USDT stablecoins were fully backed with cash, liquid assets, and other investments. The assurance report, provided by accounting firm MHA Cayman, indicated that Tether’s total assets are worth at least $82,424,821,101, while its total liabilities amount to $82,262,430,079.
Leon Marshall, head of institutional sales at Genesis Global Trading Inc, told the Wall Street Journal that hedge funds are shorting Tether because of the controversies surrounding Tether’s assets, and also due to the Federal Reserve’s decision to hike interest rates to combat inflation.
“Tether is proven with fire.”
Following the WSJ’s report, Tether’s CTO explained on Twitter that some hedge funds have been trying to ignite further panic in the market after Terra’s crash. By creating enough pressure, the hedge funds hope to cause heavy outflows that harm Tether’s liquidity, with the intention to eventually buy the tokens back at much lower prices. According to Ardoino it “seemed from the beginning a coordinated attack, with a new wave of FUD, troll armies, clowns, etc.”
Ardoino explained that, despite full transparency and 3rd party attestations, FUD rumors included that Tether is not 100% backed, issues coins from thin air, had exposure to Evergrande, or 85% exposure to Chinese CP, and that lenders were borrowing from Tether without over-collateralization.
“While the FUD was focusing on Tether, during the last 2 months of #crypto devastation, it was discovered that many lenders and hedge funds considered the holy heroes of our industry were actually taking risks that Tether never touched even with a ten-foot pole.
Anyway, eventually, these hedge funds that borrowed and shorted billions of USDt will need to buy them back. What will happen then? Tether is the only stablecoin that is proven with fire under extreme pressure,” Ardoino assured the community.
Text source: DailyCoin.com
