Tether is the issuer of the world’s largest stablecoin, USDT. The corporate has now mentioned that the hedge funds that attempted to quick USDT following the Terra debacle in Might weren’t solely misinformed but additionally incorrect.
Tether criticizes hedge funds shorting USDT
Final week, Tether printed a weblog submit referencing a Wall Avenue Journal podcast involving Luke Vargas and Caitlin McCabe. The 2 mentioned the bearish cryptocurrency market and the considerations of USDT reserves as the explanations behind USDT’s quick promoting.
Tether mentioned that hedge funds shorting USDT due to Terra’s collapse lacked understanding of USDT and the cryptocurrency market. He mentioned that the truth that hedge funds had been short-selling Tether due to Terra’s failure confirmed a niche between the contributors within the crypto market and conventional finance establishments.
Terra’s collapse began with the depegging of the UST algorithmic stablecoin. The depeg dropped the worth of LUNA (now LUNC) to $0. Earlier than the collapse, LUNA was among the many high ten largest cryptocurrencies by market cap.
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After the collapse, USDT recorded a 21% decline in market cap. Nevertheless, it maintained its place as the most important stablecoin within the crypto area. In direction of the tip of June, the chief know-how officer at Tether, Paolo Ardoino, mentioned that the stablecoin was beneath a coordinated assault by hedge funds.
Tether clears the air on USDT reserves
Tether additionally cleared the air of misconceptions in regards to the stablecoin’s holdings, comparable to holding a considerable amount of Chinese language industrial paper or its publicity to the Evergrande debt. The corporate has reiterated that it doesn’t maintain any Chinese language industrial paper. Furthermore, it lowered its complete holdings of economic paper by 88% to $3.7 billion from $30 billion over the previous 12 months.
The corporate added that its industrial paper holdings would drop to $300 million in direction of the tip of August. By early November, Tether estimates that its industrial paper holdings can have dropped to zero.
On the week of the UST debacle, the USDT stablecoin dropped barely from its peg to round $0.96 amid elevated redemptions from traders dumping the token for fiat currencies or different cryptocurrencies such because the USDC stablecoin.
Nevertheless, through the interval of the USDT depeg, Tether continued honoring redemptions at $1. In a disclosure printed on March 31, Tether mentioned that 85.64% of Tether reserves had been in money or its money equivalents.
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