TerraUSD, once one of the largest stablecoins in the market, saw its dollar parity slide significantly in May as it collapsed by more than 90%, emptying its entire crypto reserve, and fuelling a greater market-wide sell off. And while the decline in stablecoins has continued to gather mainstream interest, a recent report published in the Wall Street Journal claims that Tether (USDT) has now become a target for crypto-focused hedge funds as they aim to fuel further panic in the market. 

The article noted that hedge funds are trying to short the world’s largest stablecoin, with some investors reportedly involved in the process for at least a year. It went to add that momentum grew in betting against Tether after the decline of Terra’s algorithm stablecoin (UST) in May, with several hedge funds opening USDT short positions worth millions alone in the past month. 

Tether CTO responds: Hedge funds trying to create pressure ‘in the billions’

Paolo Ardoino, CTO of Bitfinex and its stablecoin Tether (USDT), reacted to the news on Twitter, stating that the hedge funds involved are simply trying to cause further panic in the market. He said: “It really seemed from the beginning a coordinated attack, with a new wave of FUD, troll armies, clowns etc.”

In a series of Tweets, Ardoino alleged that hedge funds have been trying to create pressure “in the billions” to “harm Tether liquidity”, claiming that their aim of fueling fear and doubt within the market was part of a plan to eventually buy back the token at a much lower price.

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Ardoino argued that Tether had never “failed a redemption, adding that “it had/has in fact greater than or equal to 100% of the backing, and all USDT are redeemed at $1.”

He said: “In 48 hours Tether processed seven billion in redemptions, averaging 10% of our total assets, something almost impossible even for banking institutions.”

Further reading

Hedge funds renew efforts to short Tether after UST collapse

Is Tether next? Stablecoin slips below dollar parity