The executive defended himself by saying Tether had improved transparency by releasing reports on its USDT reserves. With a market capitalization of above USD 67 billion, USDT is the third-largest cryptocurrency, following Bitcoin and Ether.
Paolo Ardoino, chief technology officer (CTO) of the firm Tether, recently said that hedge funds are attacking the stablecoin USDT. He believes those companies want the cryptocurrency to lose its parity with the US dollar by spreading false information about its reserves.
Ardoino stated on Twitter that hedge funds had created a coordinated attack against USDT after TerraUSD (UST) and Terra (LUNA) crashed.
The attackers have reportedly argued that reserves do not back 100% of USDT. The entrepreneur said this is false, maintaining that USDT is 100% backed and has never failed to account.
According to the CTO, their detractors rumored that Tether held reserves in shares of Evergrande, the second-largest Chinese real estate company. He said they had received accusations of causing an economic crisis like the one in 2008 due to defaults on their debt for nearly a year.
The CTO commented that Tether has never had exposure to that real estate company or Chinese securities (commercial papers). He even stated that their objective is to reduce the securities reserves to zero and transfer them to US Treasury bonds.
USDT Detractors Want to Take Advantage of Its Price Drop
According to Ardoino, hedge funds seek the fall of USDT as they have made short bets against the price of the stablecoin.
Short positions refer to bets on the price of an asset to the downside. For example, a trader asks for a loan in USDT to bet and then sells it in US dollars. If the price drops, he buys back the USDT at a lower price, returning the original amount to profit on the drop.
The CTO commented that hedge funds take advantage of the unfounded fear in the cryptocurrency market due to the fall of TerraUSD. That wave of distrust affected UDST since it slightly lost its parity but recovered again.
According to data from CoinMarketCap, the disparity of USDT with the US dollar occurred within two hours. That peg is essential for the stablecoin, which seeks to prevent exposure to the volatility of other crypto assets like Bitcoin (BTC) and Ether (ETH).
It is not the first time Tether has had to give assurance about its reserves of USDT. In early 2021, they released a report on their funds, claiming to have more than USD 35 billion. However, some specialists doubted the reliability and convertibility of those coins, alleging that cash does not back all of them.
USDT keeps its parity with the USD and has accumulated a slight 0.2% loss over the last 24 hours. While its daily trading volume is above USD 53.79 billion, its market capitalization is about USD 67.00 billion. It occupies 3rd place in the cryptocurrency ranking, according to CoinGecko.
By Alexander Salazar
