Response From Tether CTO On Reports Of Shorting USDT By Hedge Funds
Newly surfaced reports revealed that some hedge funds are now shorting Tether USDT. A Monday report from the Wall Street Journal (WSJ) stated several opened short positions on USDT.
According to the report, a leading crypto brokerage, Genesis Global Trading Inc., held some notional values worth hundreds of millions for USDT shorting. The firm is notable as an ideal platform for experienced players in the field of asset investment.
The Head of Institutional Sales at Genesis Global, Leon Marshall, reported on the new development through an interview with WSJ. He mentioned the increasing interest in conventional hedge funds speculating the short positions of USDT.
This sudden rise in interest for USDT came with the collapse of TerraUSD. This failure of the algorithmic stablecoin pushed down LUNA, Terra’s governance token. Hence, the coin plummeted from its ATH of $119.02 to zero. Subsequently, the stablecoin market and even the entire crypto space felt the impact of Terra’s downfall. There was a loss of a considerable amount of funds, running into billions of dollars from investors.
The general overview on stablecoins and even cryptocurrency changes for many people. Many lost confidence in digital currencies. Also, Tether USDT got entangled in the wave of the shock. There was a loss in value as it slipped to $0.97 with a swing of its peg on many exchanges.
However, Tether USDT gradually recovered from its drip in less than no time. According to the public report from the firm, it confirmed the full backing of all its stablecoins. They are backed with liquid assets, fiat currencies, and other investments.
Additionally, it reported the firm’s total assets, which amounted to about $82.4 billion. Also, the firm gave its total liabilities $82.2 billion, with the issued stablecoins inclusive. Tether had launched two stablecoins pegged to British pounds and Mexican peso after the failure of TerraUSD. As a result, the firm now has total stablecoins in its management.
Further in his opinion, Leon Marshall reported that some factors contribute to the increased shorting of Tether by hedge funds. He stated that part of the reasons is based on the arguments and different investors’ opinions concerning the token. Also, the decision of the Federal Reserve to address inflation through higher interest rates is a potential influencer.
Tether Chief Technology Officer (CTO) Reacts
Tether’s CTO, Paolo Ardoino, has reacted on Twitter following the reports from WSJ on the issue. In his response, the CTO mentioned that he consistently exhibits an openness toward the moves by hedge funds.
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Citing the collapse case of TerraUSD, Ardoino said that such funds are capable of destabilizing the market. He stressed that the action is a deliberate attack on the token.
According to the CTO, hedge funds usually create a state of fear, uncertainty, and doubt (FUD) for participants. He finally mentioned that USDT passed through extreme pressure and has proved its stability. Hence, hedge funds that borrowed billion in shorting USDT would repurchase the token in the future.
Featured image from BBC, chart from TradingView.com