Tether’s CTO Paolo Ardoino has revealed that hedge funds intending to short sell the dollar-pegged cryptocurrency asset have launched an “organized attack” on the stablecoin to damage Tethers liquidity.
The Tether CEO responded to rumors that hedge funds have already been taking millions in loans to short USDT since Terra (LUNA) collapsed in May, speaking on Twitter on Monday, June 27.
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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
He claimed that to purchase back tokens at a much lower price eventually, hedge funds have been putting pressure “in the billions” to “hurt Tether liquidity.”
The CTO accused several hedge funds of believing and aiding in spreading “FUD” (fear, uncertainty, and doubt) over the stablecoin.
His competitors have been spreading false information about the company via “troll networks,” including claims that it is not fully funded, creating tokens out of thin air, and having large exposure to distressed enterprises and Chinese commercial paper, and other claims.
Ardoino maintained that the firm has been working with regulators, has boosted transparency efforts, and has recently committed to phasing out its commercial paper exposure as part of a 12-part Twitter thread debunking these accusations and criticizing FUD propagators.
“Despite all the public 3rd party attestations, our collaboration with regulators, our increased transparency efforts, our commitment to phase out CP exposure and move into US Treasuries, our settlements, … they kept thinking and suggesting that we, Tether, are the bad guys.”
Tether, he claimed, “never failed a redemption,” and in the past 48 hours, it has redeemed about 10% of its total assets, which is “nearly unthinkable even for banking institutions.”
Additionally, he stated that Tether has already decreased its exposure to commercial paper, from $45 billion to $8.4 billion this month, to get rid of its backing “in the next months.”
Ardoino’s remarks, which are now lying just below the peg at $0.9989 as of writing, don’t seem to be doing much to halt the tide of short-sellers looking to make money on a probable decrease in the price of the stablecoin.
Hedge funds increasingly targetting Tether
According to Leon Marshall, head of institutional sales at Genesis, there has been an uptick in trades to short Tether through its trading platform, notably during the past month, according to a Wall Street Journal report from Monday.
According to Marshall, traditional hedge funds’ interest in Tether and their desire to short it has increased significantly.
To short sell, an investor borrows assets and immediately sells them on the open market to buy them back at a lower price later and pocket the difference. It enables shareholders to gain from the assets or shares’ decrease.
According to Marshall, established hedge funds in the United States and Europe have made up most of the short transactions, with many showing interests after the devaluation of algorithmic stablecoin TerraUSD (UST) in May.
