Paolo Ardoino, the CTO of Tether has stated that attacks launched on Tether’s USDT will backfire. In a Twitter thread yesterday, Paolo shared a series of events that have been going on in the crypto ecosystem.
It seems USDT has faced severe pressure from the big players in the crypto industry since the collapse of UST. According to Paolo, many big traders have borrowed millions of dollars to short the stablecoin.
The Reasons for the Tether Attack
In the last few years, many questions have been thrown to Tether as a company. Multiple sources have also laid a series of accusations against Tether. The most common accusation has been about the transparency of the Hong-Kong based company, and the strengths of its reserves.
Accusers have stated that Tether is not 100% backed, as it claims to be, and the company has exposure to Evergrande. Other accusers have also highlighted the company’s exposure to the Chinese CP as a red flag. Additionally, Tether has been accused of issuing its currency from thin air, and lending to borrowers without over-collateralization.
Defending these claims, Paolo Ardoino stated that Tether has 100% backing from its reserves and the company is steadily decreasing its exposure to the Chinese CP. So far, Tether has reduced its commercial paper exposure from $45 billion to $8.4 billion.
Further appraising the company’s reserves, Paolo stated that Tether has processed over $7 billion worth of redemptions in 48 hours, a volume that is nearly impossible for even banks. Additionally, in less than a month, Tether processed $16 billion in total redemptions. This represents 19% of the company’s total reserves.
Finally, Paolo warned that the hedge funds and institutions who borrowed hundreds of millions to short the stablecoin will regret their actions. The CTO emphasized that while they may have enough funds now, they will sometime run out of funds, and need to pay back. This will surely be catastrophic for such institutions if USDT remains stable.
