The USDT stablecoin becomes the target of attempts by Hedge Funds to short it according to Tether’s CTO. This is a coin with an $80 billion market worth and a history of shady transactions, Tether is chained to the US dollar. They are charging Tether for producing its USDT coins without any assets to support them since 2017.
A $4 billion hedge firm, Fir Tree Capital Management, opens a sizable short stake on Tether. If the hedge fund’s wager succeeds, profits are likely to happen within a year. Fir Tree claims to develop an innovative strategy to carry out the short position on Tether, as per a Bloomberg article. Many analysts think Fir Tree is getting a USDT loan.
CTO Claims Tether Shorting Funds Flops
In a letter on June 27, Ardoino declares that he was transparent about initiatives from some hedge firms to short Tether. He describes how these hedge funds will be using perpetual contracts, short sales on spot exchanges, and mismatches in DeFi pools to try to accomplish their aim.
If such attempts will be successful, according to Ardoino, those hedge funds would be building up pressure. Thus, it will cost billions of dollars before repurchasing USDT at a significantly lower cost.
These entities will have to repay the Tether they acquire at the coin’s correct value of $1.00 if they were unable to undermine it. According to Ardoino, if they will risk, it will be going into bankruptcy.
The liquidity issue demonstrates that hedge funds and borrowers are carrying dangers that Tether never considers even with a ten-foot pole. The insolvency of Celsius and Three Arrows Capital is a result of independent, high-risk investing practices, while Ardoino avoids naming any specific businesses.
On contrary, Ardoino states that Tether reliably redeems $16 billion of USDT at full market value in more than a month.
Genesis Asserts that Users Shorted Tether
There have been several stories of Tether shorting in recent months. Thus, one business today gives a specific disclosure to the Wall Street Journal.
Traditional hedge funds allegedly shorted Tether using Genesis Global Trading’s brokerage. This is according to Leon Marshall, chief of institutional sales. The relevant deals were worth millions of dollars.
He states that hedge funds often look for possibilities to short Tether in the United States as well as Europe. This occurs as Asian cryptocurrency companies set up the opposite side of the operation.
Why businesses decide to short the stablecoin is a mystery. Marshall contends that shorting Tether offers a chance to wager against the health of the overall economy. It will also include the rate of inflation on its list. Furthermore, according to Marshall, worries about USDT backing are motivating investors to short the asset.
Meanwhile, Tether claims that those worries are baseless. Today, Ardoino is rejecting claims that Tether lacks enough backing. Hence, they are vulnerable to Chinese commercial paper that links to the insolvent company Evergrande.
Tether previously debunks each of these allegations. Nevertheless, whether or not it is legitimate, the stablecoin’s unpredictability has probably prompted hedge funds to take chances. Despite the continuous dispute, the price of USDT is present at $1, or exactly equal to the US dollar.
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