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Tether CTO dismisses stablecoin rumours as short-sellers circle

Published by
Nonhlanhla P Dube

According to Paolo Ardoino, certain hedge funds are attempting to create pressure “in the billions” to “hurt Tether liquidity” in order to eventually purchase back tokens at a much cheaper price. 
Tether CTO Paolo Ardoino revealed that the stablecoin has been the target of a “coordinated attack” by hedge funds attempting to short sell the dollar-pegged crypto asset.

On Monday, June 27, the Tether executive responded to reports that hedge funds had borrowed millions of dollars in loans to short USDT since the collapse of Terra (LUNA) in May.

He claimed that hedge funds have been putting “billions of dollars” into creating pressure to “damage Tether liquidity” in order to finally purchase back tokens at a much lower price.

The CTO accused some hedge funds of believing and spreading “FUD” (fear, uncertainty, and doubt) about the stablecoin.

Notions that it is not fully backed, that it is issuing tokens out of “thin air,” that it has a large exposure to distressed enterprises and Chinese commercial debt, and other narratives have been pushed by its competitors through “troll networks,” he added.
Ardoino maintained that the firm has been engaging with regulators and has strengthened transparency efforts, as well as citing its recent promise to phase out its commercial paper exposure, in a 12-part Twitter thread denying these allegations and condemning FUD spreaders.

“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.”

He said that Tether had “never failed a redemption,” and that in the last 48 hours, Tether had repaid almost 10% of its total assets, which he described as “something almost impossible even for banking institutions.”

He also stated that Tether has already decreased its commercial paper exposure from R721 billion to R134.5 billion this month, with plans to eliminate it “in the next months.”

However, it looks like Ardoino’s statements will do little to deter the tidal wave of short-sellers seeking to benefit from a probable drop in the cryptocurrency’s price, which is now resting just below the peg at R16 at the time of writing.

According to a Wall Street Journal story on Monday, Leon Marshall, head of institutional sales at Genesis, there has been an upsurge in trades to short Tether using its brokerage platform, notably in the last month.

“There has been a real spike in the interest from traditional hedge funds who are taking a look at Tether and looking to short it,” 
 Marshall added.

Short-selling is an investment strategy in which an investor borrows assets and promptly sells them in the open market with the intention of repurchasing them at a lower price later to pocket the difference. It enables an investor to profit from a share’s or asset’s decrease.

Marshall went on to say that the majority of short transactions have come from established hedge firms in the United States and Europe, with many becoming interested following the May demise of algorithmic stable coin TerraUSD (UST).

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Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

Published by
Nonhlanhla P Dube
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