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Tether is the issuer of the world’s largest stablecoin, USDT. The corporate has now stated that the hedge funds that attempted to quick USDT following the Terra debacle in Could weren’t solely misinformed but additionally mistaken.
Tether criticizes hedge funds shorting USDT
Final week, Tether revealed 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 stated that hedge funds shorting USDT due to Terra’s collapse lacked understanding of USDT and the cryptocurrency market. He stated that the truth that hedge funds have been short-selling Tether due to Terra’s failure confirmed a niche between the individuals within the crypto market and conventional finance establishments.
Terra’s collapse began with the depegging of the UST algorithmic stablecoin. The depeg dropped the value of LUNA (now LUNC) to $0. Earlier than the collapse, LUNA was among the many prime ten largest cryptocurrencies by market cap.
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After the collapse, USDT recorded a 21% decline in market cap. Nonetheless, it maintained its place as the most important stablecoin within the crypto house. In direction of the tip of June, the chief expertise officer at Tether, Paolo Ardoino, stated that the stablecoin was below 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, similar 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 business 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.
Nonetheless, throughout the interval of the USDT depeg, Tether continued honoring redemptions at $1. In a disclosure revealed on March 31, Tether stated that 85.64% of Tether reserves have been in money or its money equivalents.
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