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Paolo Ardoino, the chief technology officer of Tether, has revealed that the stablecoin Tether (USDT) has been the target of a "coordinated attack" by hedge funds seeking to short-sell the U.S. dollar-backed cryptocurrency asset.
Monday, the Tether CEO addressed his 151,600 Twitter followers in response to claims that hedge funds have borrowed millions in loans to short USDT since the collapse of Terra in May.
He asserted that hedge funds have been exerting pressure "in the billions" to "harm Tether liquidity" to repurchase tokens at a substantially lower price.
Some hedge firms have believed and helped spread FUD — fear, uncertainty, and doubt — about the stablecoin, according to claims made by Ardoino.
The notions that it is not fully supported, that it is releasing tokens from “thin air,” that it has a large exposure to troubled enterprises and Chinese commercial paper, and other myths have been propagated by its competitors via “troll networks,” he claimed.
As part of a 12-part Twitter thread debunking these allegations and criticizing fear-mongers, Ardoino noted that the firm has been engaging with authorities and has strengthened transparency efforts, as well as citing its recent vow to phase out its exposure to commercial paper:
“Despite all the public 3rd party attestations, our collaboration with regulators, our increased transparency efforts, our commitment to phase out C.P. exposure and move into U.S. Treasuries, our settlements, … they kept thinking and suggesting that we, Tether, are the bad guys.”
He maintained that Tether had “never failed a redemption” and said that in the past 48 hours, Tether has repaid around 10 percent of its entire assets, which he described as “nearly difficult even for banks.”
In addition, he verified that Tether has already lowered its exposure to commercial paper from $45 billion to $8.4 billion this month to eliminate its commercial paper underpinning “in the next months.”
However, it looks like Ardoino’s words may not do much to stem the tide of short-sellers looking to benefit from a probable decrease in the cryptocurrency’s price, which at the time of writing is lying just below the peg at $0.9989.
Monday’s Wall Street Journal article reported Leon Marshall, head of institutional sales at Genesis, saying that short Tether trades on its trading platform had increased, notably during the past month.
“There has been a real spike in the interest from traditional hedge funds which are taking a look at Tether and looking to short it,” explained Marshall.
Short-selling is an investing technique whereby an investor borrows assets and immediately sells them on the open market to repurchase them at a lower price to pocket the difference. It lets an investor profit from a stock or asset’s fall.
Marshall said that most short transactions have originated from established hedge firms in the United States and Europe, with many getting interested after the May decline of algorithmic stablecoin TerraUSD Classic (USTC).
