CTO Paolo Ardoino was responding to a June 27 report by The Wall Street Journal (WSJ) about hedge funds shorting stablecoin USDT through brokerage firm Genesis Global Trading.

Paolo Ardoino – CTO

The article quotes Leon Marshall – head of institutional sales at Genesis Global to comment on how traditional hedge funds are shorting. . Marshall asserts:

“Traditional hedge funds are actually more interested, they are looking at and try to short it”.

Tether's response

Just hours later, CTO Paolo Ardoino of Tether already rejected strategies and reasons for short USDT. Ardoino points out the tools being used by traditional finance to short largest in the world by market capitalization.

“Tools: USDT/USD perpetual contract (perfect attack vector provides asymmetric bets), spot short sell, pool unbalanced,…

Goal: create enough pressure for billions of dollars, cause tons of outflows that hurt USDT liquidity, and eventually buy back tokens at much lower prices.”

According to him, hedge funds trust and are also partly responsible for allegations that USDT is built on imaginary assets and lies. He also demonstrated that “many competitors spread through coordinated troll networks” to discredit Tether and ruin its reputation. In defense of Tether, Ardoino said:

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“But as we always say, in reality, Tether has/is having >= 100% backing assets, has never failed to execute a redemption order and all USDT is exchanged at 1 USD.

In 48 hours, Tether processed 7 billion USD of equivalent transactions, which is an average of 10% of our total assets, which is almost impossible even for banking institutions.”

If it is as Tether says, such liquidity after a bank run makes collapse is unlikely. In 2007, the UK's Northern Rock bank was stripped of only 5% of assets, which was enough to prompt them to seek a government bailout and was subsequently nationalized.

The pressure on Tether has grown increasingly severe in just a short time despite the absence of any obvious problems. Over the past month, $16 billion has been withdrawn from Tether (about 20% market cap) and no exchange transactions have been publicly reported.

The WSJ noted USDT's market capitalization fell by $16 billion — now at $67 billion — but did not comment on whether that would affect its reserves.

Ardoino also highlights the actions of other financial institutions and their investments in projects such as .

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“And while FUD is focusing on Tether, during the 2 months that wreaked havoc on the market Recently, many lenders and hedge funds that are considered holy heroes in the industry are actually taking risks that Tether has never taken for any reason.”

Overview of Genesis Global

Genesis Global is a brokerage firm that handles trades for professional investors. Marshal commented:

“Short trades are almost exclusively done by traditional hedge funds in the US and Europe, while companies – especially those based in Asia – are happy to facilitate the other side of the transaction.”

There is currently no information on short USDT hedge funds.

Genesis Global has $14.6 billion in loans in effect as of Q1 2022 and 48% company assets are held in USD or . The short USDT interest situation was also mentioned in report their.

“While an asset Short order designed to limit parity does not appear to require additional options, the derivatives trading desk sees significant benefits to short USDT trading not only in futures contracts. OTC but also through options contracts.”