- Tether CTO Paolo Ardoino said that some cryptocurrency companies attempted to short its stablecoin.
- Genesis Global Trading also acknowledged that its hedge fund customers shorted Tether using its services.
- Tether seems to have weathered the challenge: USDT is now valued at $1.00.
Today, Tether’s Chief Technology Officer Paolo Ardoino confirmed hedge funds’ efforts to short the USDT stablecoin.
CTO Says Funds Couldn’t Short Tether
Ardoino stated on June 27 that he is transparent about hedge fund efforts to short Tether (USDT).
The hedge funds attempted to attain their objective via the use of perpetual contracts, short-selling on spot markets, and creating imbalances in DeFi pools.
These attempts would enable hedge funds to create billions of dollars worth of pressure before repurchasing USDT at a much lower price.
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
Having failed to destabilise Tether, Ardoino asserts that those firms must purchase back the Tether they borrowed at the coin’s correct $1.00 value or risk bankruptcy.
The month’s liquidity crisis demonstrates that bankers and hedge funds are taking risks that Tether has never even touched with a ten-foot pole. Celsius and Three Arrows Capital are in danger of bankruptcy due to unrelated high-risk investing practices, but Ardoino did not mention any specific firms.
Tether had redeemed $16 billion worth of USDT at the total value in more than a month.
Genesis Reports Clients Shorted Tether
In recent months, rumours of Tether shorting have come from various sources. Recently, the Wall Street Journal reported an explicit acknowledgement from one company.
The head of institutional sales at Genesis Global Trading, Leon Marshall, asserts that typical hedge funds shorted Tether via his firm. The related transactions involved “hundreds of millions” of dollars.
He noted that hedge funds in the United States and Europe seek chances to short Tether, while crypto businesses in Asia handle the opposite side of the deal.
Unknown are the reasons corporations opted to short the stablecoin. Shorting Tether, according to Marshall, is a method to wager against the larger economy and growing inflation. In addition, Marshall asserts that investors are compelled to short USDT because of backing fears.
In contrast, Tether asserts that these worries are based on false information. Ardoino refuted claims about Tether’s inadequate backing, exposure to Chinese commercial paper, and exposure to the defaulting corporation Evergrande.
Tether has already debunked these rumours in their entirety. Nonetheless, anxiety around stablecoin, whether justified or not, has probably prompted hedge funds to take risks.
Despite constant criticism, USDT is valued at parity with the U.S. dollar at the current exchange rate of $1.00.