- Tether’s CTO claimed yesterday that hedge funds were trying to attack Tether.
- In his opinion, they are trying to create more chaos in the market by short positions.
- This suspicion was confirmed by a report from the Wall Street Journal.
After TerraUSD went down with drums and trumpets, the sharks seem to have gushed blood and circled the crypto market. According to a report by the Wall Street Journal, the broker Genesis Global Trading confirmed that several hedge funds from its clientele are betting that Tether will also collapse.
However, these are traditional hedge funds that have only been dedicated to the topic since the Terra crash in May. Although there were probably hedge funds that would have built up positions again and again in the last 12 months, but now the reasons and the number of interested parties have changed. While some have doubts about the coverage of Tether, other hedge funds see the general situation of the economy as unfavorable and bet against assets that are risky in their eyes.
Paolo Ardoino also dedicated himself to the matter via Twitter and cleared up the topic. In his opinion, many of these hedge funds are based on rumors and misrepresentations. In addition, he referred to the latest company data. According to the report, Tether has not only redeemed $16 billion worth of stablecoins in recent months, but also manages its assets proactively and responsibly. He sees the biggest weakness in the lenders, who have been irresponsible with the funds of their customers.
How safe is USDT?
This question has been on the market for about 4 years, and in fact the case against Tether or iFinex, which came to an end in New York in 2021, has brought some weaknesses to light.
At that time, it was the New York Prosecutor’s Office that was bothered, among other things, by the promise that $ 1 was also deposited per USDT. However, as was revealed in the course of the procedure, USDT was never fully covered at that time. So stablecoins had been put into circulation, which could not have been redeemed for US dollars in the event of a bank run.
In addition, the procedure showed for the first time that Tether uses not only US dollars for coverage, but also other assets, including cryptocurrencies and debt securities. Since the proceedings against conditions have been discontinued, Tether has had to publish transparency reports on a quarterly basis. So the crisis around Terra has warmed up points that had to be faced for a long time.
USDC gains ground
This uncertainty is not only noticeable through short positions of hedge funds, but is also reflected in the strengthening of the only alternative so far. Although investors can also bet on other stablecoins, no other is as widespread and enjoys the same reputation as USDC from Circle.
Over the past few months, it has been observed that USD Coin is making more and more ground and could perhaps even move past Tether. With regard to a possible crash of Tether, however, USDC does not promise any increase in safety. Tether is so supportive of the market that it is very likely that other crypto assets will not be able to survive for long if the collapse that Wall Street stock market sharks are currently betting on occurs.
So if you want to trade completely risk-averse, you probably prefer to rely on your own bank account when it comes to cash instead of “stables”.
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