Tether to Hedge Funds Shorting USDT: Strategy Failed, ‘You Made no Profit’
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Tether, issuers of the USDT stablecoin, criticized hedge funds for shorting the cryptocurrency saying that the bearish bets have failed to pay off and are not worth the huge amount of fees brought on by the strategy.
Stablecoins have come under increased scrutiny following the high-profile collapse of the Terra blockchain in May. Amid the chaos, USDT temporarily lost its parity to the dollar, falling to $0.95 at some point, as investors exited the stablecoin in panic.
The sell-off prompted several hedge funds to take short positions on the crypto markets, and more on USDT, the world’s largest stablecoin with $66 billion in assets. Funds that are short USDT have a funding cost to put on the trade, paid everytime a bet goes against them.
With the USDT price capped at $1, most of the bets have been taking place on liquidity pools in DeFi and in futures tracking USDT. The goal is to create pressure, “in the billions, causing ton of outflows to harm Tether liquidity and eventually buy back tokens at much lower price.”
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