Tether CTO rebuts short sellers' FUD targeting stablecoins

Tether CTO Paolo Ardoino has confirmed that the stablecoin has become the subject of a "coordinated attack" by hedge funds looking to short the dollar-pegged crypto asset.

Speaking to his 151,600 Twitter followers on Monday, June 27, the Tether executive responded to reports that hedge funds have borrowed millions of dollars in loans to short USDT since Terra (LUNA) went bankrupt in May.

He claimed that hedge funds have been trying to create “billions of dollars” of pressure to “damage Tether’s liquidity,” with the aim of eventually buying back the token at a much lower price.

The CTO accused some hedge funds of believing in and helping to spread "FUD" (fear, uncertainty, and doubt) about stablecoins.

He said it was argued that it was not 100% backed, was issuing tokens "out of thin air", had significant exposure to troubled companies and Chinese commercial paper, and various other "troll networks" created by competitors. "Rumors spread.

In 12 tweets, Ardoino refuted the rumors and slammed the purveyors of FUD. He believes his firm has been working with regulators to increase transparency, noting its recent pledge to phase out exposure to commercial paper.

“Despite all of the public third-party attestations, our work with regulators, our efforts to increase transparency, our commitment to gradually reduce our exposure to commercial paper and move to U.S. Treasuries, our settlements ... they have always considered our Tether bad guys .”

He believes that Tether has "never failed a redemption", adding that in the past 48 hours alone, Tether has redeemed about 10% of its total assets, which he said is "nearly impossible for even a banking institution to do." things to come".

He also confirmed that Tether has reduced its commercial paper exposure from $45 billion to $8.4 billion this month and intends to clear its commercial paper backing in the "coming months."

However, Ardoino's rhetoric does not appear to be able to stem the wave of short sellers. Short sellers are looking to profit from a potential drop in the cryptocurrency’s price, with USDT currently trading below $0.9989.

On Monday, a Wall Street Journal report quoted Genesis head of institutional sales Leon Marshall as saying that shorting Tether through its brokerage platform had increased, particularly in the past month.

"Traditional hedge funds have taken a lot of interest in Tether, they are looking at Tether and looking to short it," Marshall said.

Shorting is an investment strategy in which investors borrow an asset and immediately sell it on the open market with the intention of buying it back later at a lower price to pocket the difference. It allows investors to profit from a decline in a stock or asset.

Marshall added that most of the shorting was from traditional hedge funds in the U.S. and Europe, with many becoming interested in the algorithmic stablecoin TerraUSD (UST) following its decline in May.