Since the collapse of the algorithmic stablecoin TerraUSD (UST) last month, more and more traditional hedge funds are trying to short USDT, the leading stablecoin , betting hundreds of millions of dollars that the price of USDT will fall , The Wall Street Journal reported . In this regard, Paolo Ardoino, chief technical officer of USDT issuer Tether, recently confirmed the news and expressed an open attitude to some hedge funds’ attempts.
Paolo Ardoino tweeted yesterday (27) night that these hedge funds are trying to create billions of dollars of pressure through USDT/USD perpetual contracts, short selling in the spot market, and creating imbalances in DeFi pools , resulting in a large outflow of funds, damaging the liquidity of USDT, and eventually repurchasing USDT at a low price.
Paolo Ardoino bluntly stated that these hedge funds tried to cause market panic after the collapse of Terra and LUNA. “From the beginning, it seemed like a coordinated attack, with a new wave of FUD, navy and clowns,” he said.
He continued that although there are public third-party proofs, Tether’s cooperation with regulators, and Tether’s increased transparency, hedge funds have always believed and implied that “Tether is a bad guy.” Paolo Ardoino argues that Tether is backed by ‘>=100%’ reserves, redemptions have never failed, and all USDT are redeemed at $1.
Failing to destabilize USDT, Paolo Ardoino said these hedge funds would need to buy back the USDT they borrowed for $1 or face bankruptcy.
Paolo Ardoino believes that the liquidity crisis in the cryptocurrency market continues to spread, and many lending platforms and hedge funds are “taking risks that Tether has never been exposed to.” Although not named, Celsius and Three Arrows Capital have encountered liquidity problems and The verge of bankruptcy.
In comparison, Paolo Ardoino said that Tether processed $7 billion in redemption operations in the past 48 hours alone, and successfully redeemed $16 billion in full USDT in just over a month. It’s almost impossible for even a banking institution”, “Prove that Tether’s operations, investment portfolio, banking infrastructure and team are reliable and battle-tested”, “USDT is the only stablecoin that has proven its strength under extreme pressure currency”.
In recent months, rumors about USDT being shorted by institutions have been flying around, but the Wall Street Journal interviewed cryptocurrency broker Genesis Global Trading yesterday and confirmed that the rumors were true.
Leon Marshall, head of institutional sales at Genesis Global Trading, claimed that traditional hedge funds have sold USDT through the firm in a nominal value of “hundreds of millions of dollars,” but declined to give further details.
Leon Marshall said there are two main reasons for hedge funds to short USDT. The first is to bet that the overall economy will turn bad. I believe that the Federal Reserve will continue to raise interest rates to scare investors away from risky assets such as cryptocurrencies. The second is to question that USDT does not have sufficient USD guarantees at all.
Despite the ongoing controversy, USDT is currently trading at $1, 1:1 with the U.S. dollar.
