Hedge Funds Tried to Short USDT
The USDT stablecoin has been the target of attempts by hedge funds to short it, according to Paolo Ardoino, CTO of Tether.
He described how these hedge funds used perpetual contracts, short-selling on spot markets, and imbalances in DeFi pools to try to achieve their aim.
If such attempts had been successful, according to Ardoino, those hedge funds would have applied pressure valued at billions of dollars before repurchasing USDT at a significantly reduced price.
These organizations will have to repay the Tether they borrowed at the coin’s correct value of $1.00 if they want to avoid going bankrupt, according to Ardoino, who claims that attempts to destabilize Tether were unsuccessful.
Since bankers and hedge funds are “taking risks that Tether never touched even with a ten-foot pole,” according to Ardoino, this month’s liquidity crisis is proof of this. The insolvency of Celsius and Three Arrows Capital is a result of unrelated, high-risk investing practices, while Ardoino avoided naming any specific companies.
In contrast, Ardoino stated Tether had successfully redeemed $16 billion USDT at full value in more than a month.
Although there have been several stories of Tether shorting in recent months, one firm today made a clear disclosure to the Wall Street Journal.
Traditional hedge funds allegedly shorted Tether through Genesis Global Trading’s brokerage, according to Leon Marshall, head of institutional sales. The relevant deals, according to him, were worth “hundreds of millions” of dollars.
He noted that hedge funds with headquarters in the United States and Europe often look for chances to short Tether, with Asian cryptocurrency companies handling the opposite side of the deal.
Why businesses choose to short the stablecoin is unknown. Shorting Tether, according to Marshall, is a method to wager on a weaker overall economy and more inflation. Furthermore, according to Marshall, worries about USDT backing are motivating investors to short the asset.
Meanwhile, Tether claims that those worries are unfounded. Today, Ardoino refuted claims that Tether lacked enough backing, was exposed to Chinese commercial paper, and was linked to the insolvent company Evergrande.
Tether has previously refuted each of these rumors. Nevertheless, whether or not it is justified, the stablecoin’s unpredictability has probably prompted hedge funds to take chances.
Despite continuous dispute, the price of USDT is presently $1, or exactly parity with the US dollar.
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