👋 Want to work with us? CryptoSlate is hiring for a handful of positions!

Tether CTO Paolo Ardoino responded to a June 27 report by The Wall Street Journal that hedge funds have short bets on Tether’s stablecoin USDT through crypto brokerage Genesis Global Trading.

The article quotes Leon Marshall, Head of Institutional Sales at Genesis Global, for his comments on how traditional hedge funds seek to short Tether USDT. Marshall said,

“There’s been a real spike in interest from traditional hedge funds looking into tether and looking to short it.”

Tether’s response

Tether CTO Paolo Ardoino took to Twitter hours later to rebut the hedge fund strategy and justification for shorting USDT. Ardoino Explain the tools used by mainstream finance to short sell the world’s largest stablecoin by market capitalization.

He went on to say that hedge funds believe in and are partly responsible for claims that Tether is a house of cards built on imaginary assets and lies. He also attested that “competitors spread through coordinated troll networks” to discredit Tether and ruin its reputation. In defense of Tether, Ardoino said,

The liquidity shown by Tether following the bank run on its assets following the Terra collapse is unprecedented. In 2007, the British bank North Rock experienced a run on its assets of just 5%, which caused it to become state-owned following a government bailout.

Tether has absorbed greater pressure over a shorter period with no apparent issues, as $16 billion has been withdrawn from Tether in the past month, or around 20% of its market capitalization, and no buybacks have been made. audience.

The WSJ noted a $16 billion drop in Tether’s market capitalization — currently at $67 billion — but did not say whether that had an impact on Tether’s reserves.

Testing Tether’s Liquidity

Ardoino also highlighted the actions of other financial entities and their investment in projects such as Terra USD stating,

A look at Genesis Global

Genesis Global is a brokerage that handles trades for professional investors. remarks the Marshal,

“Short trades are almost exclusively done by traditional hedge funds in the US and Europe, while crypto firms, especially those based in Asia, have been happy to facilitate the other side of trades.”

The names of hedge funds placing bets against Tether are unknown at this time.

Genesis Global had $14.6 billion in active loans in the first quarter of 2022, and 48% of its assets were held in USD or stablecoins. The interest in shorting Tether was also mentioned in the report.

“While selling short an asset designed to be capped at parity appears to require no other option, the Derivatives Desk has seen substantial interest in putting on the short-term trade, not only in forward contracts. over-the-counter, but also via options.”

Posted in: Investments, Stablecoins