Tether Calls Hedge Funds Shorting USDT 'Categorically Wrong'

Tether Calls Hedge Funds Shorting USDT 'Categorically Wrong'

Tether called 'categorically wrong' the idea of ​​shorting USDT by hedge funds

Hedge funds that decided to short USDT after the Terra crash “do not understand how the cryptocurrency market works at a fundamental level and Tether. This was announced by the stablecoin issuer.

In Tether Limited responded to a WSJ podcast discussing USDT collateral concerns and the rationale for shorting it.

For the first time, the publication reported on the popularity of such an idea in June. At that time, the company's CTO Paolo Ardoino stated that the company had processed the conversion of 7 billion tokens into fiat (~10% of total assets). 

On June 18, the website of the stablecoin issuer was subjected to a large-scale DDoS attack. The issuer's CTO then ruled out the impact of the incident on the ability to redeem positions in USDT.

“Hedge funds’ view of the collapse of Terra as a constructive factor for shorting Tether represents an asymmetric knowledge gap between crypto market participants and traditional financial institutions,” the issuer wrote.

Among other “unreliable reasons” for such actions, the company named:

  • USDT issue “out of thin air”;
  • significant investments in commercial paper of Chinese companies, including problematic developer Evergrande;
  • “provision of unsecured loans to third parties”;
  • distrust of the thesis of 100% backing of issued “stablecoins” and its high liquidity.

Recall that in mid-May, USDT deviated from its peg to the US dollar, testing the level of $0.94, but later returned to parity.

Earlier, Tether promised to completely reset the share of commercial paper in reserves no later than November . A year ago, their volume was estimated at $30.8 billion against the current $3.7 billion, according to Ardoino.

For more information on how Tether works, read our educational cards.

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