Tether CTO refutes stablecoin FUD as short-sellers circle

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Teth­er chief tech­nol­o­gy offi­cer Pao­lo Ardoino has con­firmed that the sta­ble­coin has been the sub­ject of a “coor­di­nat­ed attack” by hedge funds look­ing to short sell the dol­lar-pegged cryp­to asset. 

Speak­ing to his 151,600 Twit­ter fol­low­ers on Mon­day, June 27, the Teth­er exec­u­tive was respond­ing to reports that hedge funds have been bor­row­ing mil­lions in loans to short USDT since the col­lapse of Ter­ra (LUNA) in May.

He alleged that hedge funds have been try­ing to cre­ate pres­sure “in the bil­lions” to “harm Teth­er liq­uid­i­ty” with the aim of even­tu­al­ly buy­ing back tokens at a much low­er price.

The CTO levied accu­sa­tions that some hedge funds have believed and help spread “FUD” (fear, uncer­tain­ty, and doubt) about the stablecoin. 

Notions that it is not 100% backed, is issu­ing tokens from “thin air,” has sig­nif­i­cant expo­sure to dis­tressed com­pa­nies and Chi­nese com­mer­cial paper, and oth­er nar­ra­tives have been spread by its com­peti­tors over “troll net­works,” he said.

As part of a 12-part Twit­ter thread refut­ing these rumors and slam­ming FUD spread­ers, Ardoino argued that the com­pa­ny has been col­lab­o­rat­ing with reg­u­la­tors and has increased trans­paren­cy efforts, as well as not­ing its recent com­mit­ment to phase out its com­mer­cial paper exposure.

“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 argued that Teth­er has “nev­er failed a redemp­tion,” adding that in just the last 48 hours, Teth­er has redeemed around 10% of its total assets, which he said is “some­thing almost impos­si­ble even for bank­ing institutions.”

He also con­firmed that Teth­er has already reduced its com­mer­cial paper expo­sure from $45 bil­lion to $8.4 bil­lion this month, intend­ing to clear out its com­mer­cial paper back­ing “in the com­ing months.” 

How­ev­er, it appears Ardoino’s com­ments may not do much to hold back the tidal wave of short-sell­ers hop­ing to prof­it from a poten­tial decline in the crypto’s price, which is cur­rent­ly sit­ting just below peg at $0.9989 at the time of writing. 

On Mon­day, a report from the Wall Street Jour­nal quot­ed Leon Mar­shall, head of insti­tu­tion­al sales at Gen­e­sis, stat­ing that there has been an increase in trades to short Teth­er through its bro­ker­age plat­form, par­tic­u­lar­ly over the past month. 

Relat­ed: USDC’s ‘real vol­ume’ flips Teth­er on Ethereum as total sup­ply hits 55.9B

“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.

Short-sell­ing is an invest­ment strat­e­gy by which an investor bor­rows assets and imme­di­ate­ly sells them in the open mar­ket, intend­ing to repur­chase them lat­er at a low­er price to pock­et the dif­fer­ence. It allows an investor to prof­it from the decline of a share or asset. 

Mar­shall added that the major­i­ty of short trades have come from tra­di­tion­al hedge funds in the Unit­ed States and Europe, with many becom­ing inter­est­ed fol­low­ing the fall of algo­rith­mic sta­ble­coin Ter­raUSD (UST) in May. 



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