Tether’s CTO, Paolo Ardoino has confirmed that the stablecoin Tether (USDT) has been the subject of a “coordinated attack” by hedge funds looking to short sell the US dollar-pegged crypto asset.
Speaking to his 151,600 Twitter followers on Monday, The Tether executive was responding to reports that hedge funds have been borrowing millions of dollars to short USDT since the Terra crash in May.
He claimed that hedge funds have been trying to create “billions” of pressure to “damage Tether liquidity” with the aim of eventually buying back tokens at a much lower price.
Ardoino accused some hedge funds of having believed in and helped spread FUD – fear, uncertainty, and doubt – about the stablecoin.
Notions that it is not 100% backed, that it is issuing tokens out of “thin air”, that it has significant exposure to distressed companies and Chinese commercial paper and other narratives have been spread by its competitors via “networks”. of trolls”, said.
1/
I have been open about the attempts from some hedge funds that were trying to cause further panic on the market after TERRA/LUNA collapse.
It really seemed from the beginning a coordinated attack, with a new wave of FUD, troll armies, clowns etc. https://t.co/hhcsgHV1Ow– Paolo Ardoino (@paoloardoino) June 27, 2022
1/ I have spoken openly about the attempts of some hedge funds that were trying to cause more panic in the market after the collapse of TERRA/LUNA. It really seemed like a coordinated attack from the start, with a new wave of FUD, armies of trolls, clowns, etc.
As part of a 12-part Twitter thread refuting these rumors and criticizing FUD propagators, Ardoino argued that the company has been collaborating with regulators and increasing transparency efforts, noting its recent commitment to phase out its exposure to commercial paper:
“Despite all public third-party attestation, our collaboration with regulators, our increased transparency efforts, our commitment to phase out CP exposure and move to US Treasuries, our sell-offs, … continued thinking and suggesting that we, Tether, are the bad guys.”
He argued that Tether “has never failed a bailout,” adding that in the last 48 hours alone, Tether has bailed out around 10% of its total assets.which he said is “something almost impossible even for banking institutions.”
He also confirmed that Tether has already reduced its exposure to commercial paper from $45 billion to $8.4 billion this month, and that it intends to liquidate its commercial paper backing “in the coming months.”
Nevertheless, It appears that Ardoino’s comments cannot do much to stem the tide of short sellers hoping to benefit from a possible drop in the price of the cryptocurrency, which is currently just below parity at $0.9989. at the time of writing this article.
On Monday, A Wall Street Journal report quoted Leon Marshall, head of institutional sales at Genesis, as saying that there has been an increase in Tether shorting through its brokerage platform, particularly over the past month.
“There has been a real uptick in interest from traditional hedge funds who are looking at Tether and looking to short it”Marshall said.
Short selling is an investment strategy whereby an investor borrows assets and immediately sells them on the open market, with the intention of buying them back later at a lower price to pocket the difference.. It allows the investor to benefit from the fall of a stock or an asset.
Marshall added that most short-term trading is coming from traditional hedge funds in the United States and Europe, with many becoming interested after the TerraUSD Classic (USTC) algorithmic stablecoin crash in May.
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