CTO of Tether, Paolo Ardoino confirmed that the stablecoin Tether (USDT) has come under a “coordinated attack” by hedge funds seeking to short 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 attempted to create “billions” of pressure to “damage Tether’s liquidity” in an attempt to eventually buy back tokens at a much lower price.
Ardoino accused some hedge funds of believing and helping to spread FUD – fear, uncertainty and doubt – about the stablecoin.
Notions that it is not 100% backed, that it issues tokens from “thin air”, that it has significant exposure to distressed companies and Chinese commercial paper and other tales spread by its competitors via “troll networks”, said.
I have been open about the attempts of some hedge funds trying to create panic in the market after the TERRA/LUNA collapse.
It really looked like a coordinated attack from the start, with a new wave of FUD, troll armies, clowns, etc. https://t.co/hhcsgHV1Ow
—Paolo Ardoino (@paoloardoino) June 27, 2022
1/ I spoke openly about the attempts of some hedge funds trying to create panic in the market after the collapse of TERRA/LUNA. It really felt 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 was working with regulators and increasing its transparency efforts, noting its recent commitment to phase out its exposure to commercial paper:
“Despite all the public attestations from third parties, our collaboration with regulators, our increased transparency efforts, our commitment to phase out exposure to CP and move to US Treasuries, our sales, … have continued to think and suggest that we, Tether, are the bad guys.”
He argued that Tether “has never failed a bailout,” adding that in just 48 hours, Tether bailed out around 10% of its total assets.which he says is “something almost impossible, even for banking institutions”.
He also confirmed that Tether has already reduced its commercial paper exposure from $45 billion to $8.4 billion this month, and that it intends to liquidate its back-to-back commercial paper “in the coming months.”
However, It seems that Ardoino’s comments can do little to stem the tide of short sellers hoping to benefit from a possible decline in the price of the cryptocurrency, which is currently just below parity at 0, $9989. at the time of writing this article.
Monday, A Wall Street Journal report quoted Leon Marshall, head of institutional sales at Genesis, as saying that there has been an increase in shorting Tether through its brokerage platform, particularly over the past month.
“There has been a real surge in interest from traditional hedge funds looking at Tether and looking to short it”said Marshal.
Short selling is an investment strategy where an investor borrows assets and immediately sells them in the open market, with the intention of buying them back later at a lower price to pocket the difference.. It allows the investor to take advantage of a decline in a stock or asset.
Marshall added that most short-term trading came from traditional hedge funds in the US and Europe, with many taking interest after the algorithmic crash of stablecoin TerraUSD Classic (USTC) in May.
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