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Tether is Fully Backed, Has ‘Never Failed a Redemption,’ CTO Tells Short Sellers

Fredrik Vold
Last updated: | 3 min read
Source: Adobe/Jim


Hedge funds that are attempting to make money by shorting the stablecoin tether (USDT) believe in the anti-tether ‘FUD’ (fear, uncertainty, and doubt) that is being spread, despite efforts to increase transparency, Tether chief technology officer Paolo Ardoino has said.

In a lengthy Twitter thread on Monday, Ardoino said that some hedge funds have attempted to “cause further panic” in the market following the collapse of the Terra (LUNA) ecosystem, and that these funds have now targeted USDT.

Their goal, per the CTO, is to “create enough pressure, in the billions, causing ton of outflows to harm Tether liquidity and eventually buy back tokens at much lower price.”

According to Ardoino, the hedge funds in question believe in all the FUD that has been spread about Tether for years, including accusations that the stablecoin issuer doesn’t have full backing for the circulating coins, and that it allegedly has exposure to risky Chinese debt securities.

“Despite all the public 3rd party attestations, our collaboration with regulators, our increased transparency efforts, our commitment to phase out [commercial paper] exposure and move into US Treasuries, our settlements, … they kept thinking and suggesting that we, Tether, are the bad guys,” he wrote.

The comments from Ardoino came after a Wall Street Journal article yesterday said that short sellers are “ramping up their bets against tether.”

Commenting in the article, Leon Marshall, head of institutional sales at Genesis Global Trading, confirmed that traditional hedge funds have made bets worth “hundreds of millions” of US dollars against the stablecoin.

“There has been a real spike in the interest from traditional hedge funds who are taking a look at tether and looking to short it,” Marshall was quoted as stating.

According to Tether’s Ardoino, however, the accusations are completely wrong. In his Twitter thread, he claimed that Tether has a backing of more than 100%, that it has never failed a redemption, and that all USDT tokens are redeemable for USD 1.

The Tether CTO further reiterated comments from earlier that the company has reduced its holdings of commercial paper and instead increased its holdings of US Treasuries. Tether’s commercial paper investments will be fully phased out “in the coming months,” he said.

“[E]ventually these hedge funds, that borrowed and shorted billions of USDT will need to buy them back. What will happen then,” he went on to ask, before stating: “Tether is the only stablecoin that is proven with fire under extreme pressure.”

As reported, in the fourth quarter of 2021, commercial paper made up just over 30% of Tether’s total reserves, down from more than 44% in the third quarter, and the number is set to decrease further.

US Treasuries are generally seen as a more liquid and safer investment than commercial debt (commercial ‘papers’).

Earlier this month, Tether issued an official statement where it “condemned” what it called “false rumors” about its holdings, including allegations that it holds large amounts of Chinese commercial paper that supposedly trades at a discount.

“These rumours are completely false and likely spread to induce further panic in order to generate additional profits from an already stressed market,” the company said at the time.


Learn more: 
Tether Condemns 3 ‘False Rumors’ About Its Exposure
Tether is Fully Backed, Always Redeemable for USD 1, Co-Founder Says

Tether Launches GBP-pegged Stablecoin, Supports UK Plan to Become ‘Cryptoasset Hub’
Tether in the Spotlight After USD 9B Worth of Redemptions

Tether Freezes USD 160M-Heavy Addresses on Law Enforcement Request
Tether CTO Paolo Ardoino on LUNA-UST Crash