Tether CTO accused hedge funds of aiding the spread of FUD; fear, uncertainty, and doubt in order to buy the tokens at a much lower price.
According to Paolo Ardoino, certain hedge funds are allegedly putting “billions” of dollars under pressure to “damage Tether liquidity” in order to later repurchase tokens at a much reduced price.
Tether’s chief technology officer Paolo Ardoino has revealed that hedge funds intending to short sell the dollar-pegged cryptocurrency asset have launched an “organized attack” on the stablecoin.
The Tether executive responded to rumors that hedge funds have been borrowing millions in loans to short USDT since Terra (LUNA) collapsed in May when speaking to his 151,600 Twitter followers on Monday, June 27.
He claimed that in order to eventually purchase back tokens at a much lower price, hedge funds have been putting pressure “in the billions” to “hurt Tether liquidity.”
The CTO accused several hedge funds of believing and aiding in the spread of “FUD” (fear, uncertainty, and doubt) over the stablecoin.
His competitors have been spreading false information about the company via “troll networks,” including claims that it is not fully funded, that it is creating tokens out of thin air, that it has a large exposure to distressed enterprises and Chinese commercial paper, and other claims.
Ardoino maintained that the firm has been working with regulators, has boosted transparency efforts, and has recently committed to phasing out its commercial paper exposure as part of a 12-part Twitter thread debunking these accusations and criticizing FUD propagators.
“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.”
Tether, he claimed, “never failed a redemption,” and in the past 48 hours, it has redeemed about 10% of its total assets, which is “nearly unthinkable even for banking institutions.”
Additionally, he stated that Tether has already decreased its exposure to commercial paper, from $45 billion to $8.4 billion this month, with the intention of getting rid of its backing “in the next months.”
Ardoino’s remarks, which are now lying just below the peg at $0.9989 as of writing, don’t seem to be doing much to halt the tide of short-sellers looking to make money on a probable decrease in the price of the cryptocurrency, though.
According to Leon Marshall, head of institutional sales at Genesis, there has been an uptick in trades to short Tether through its trading platform, notably during the past month, according to a Wall Street Journal report from Monday.
“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,” said Marshall.
In order to short sell, an investor borrows assets and immediately sells them on the open market with the goal of later buying them back at a lower price in order to keep the difference. It enables a shareholder to gain from the asset’s or share’s decrease.
According to Marshall, established hedge funds in the United States and Europe have made up the majority of the short transactions, with many of them showing interest after the devaluation of algorithmic stablecoin TerraUSD (UST) in May.
