Who’s behind the attack on USDT? Tether CTO claims to know the answer

Tether CTO Paolo Ardoyno said various hedge funds were behind the coordinated attack on the USDT, a stablecoin representing the US dollar in cyberspace. According to Ardoyno, they tried to cause further panic in the market after the collapse of TERRA/LUNA to create enough pressure, in the billions of dollars, “causing a ton of outflows to harm Tether liquidity and eventually buy back tokens at a much lower price.”

“I have been open about the attempts from some hedge funds that were trying to cause further panic on the market after TERRA/LUNA collapse. It seemed from the beginning a coordinated attack, with a new wave of FUD, troll armies, clowns, etc.,” he admits.

According to Ardoyno, those hedge funds believed that “Tether are the bad guys.”

“But as we always said, Tether had/has, in fact, >= 100% of the backing, never failed a redemption, and all USDT are redeemed at $1. In 48 hours, Tether processed 7B in redemptions, averaging 10% of our total assets, something almost impossible even for banking institutions. And more than one month, Tether processed 16B in redemptions (~19% of our total reserves), again proving that our operations, portfolio, banking infrastructure, and team are solid and battle-tested. Tether also reduced its commercial paper exposure from ~45B to ~8.4B and is set to phase it out in full in the coming months. All the expiring CP have been rolled into US Treasury bills, and we’ll keep going till CP exposure will be 0”, Tether CTO noted.

The Wall Street Journal has published a confession of Leon Marshall, head of institutional sales at Genesis Global Trading. He said traditional hedge funds shorted Tether through his brokerage. And those trades are worth “hundreds of millions” of dollars in notional value.

The collapsed TerraUSD is what is known as an algorithmic stablecoin, which means it does not have to be backed by tangible assets. Other more traditional stablecoins, including Tether, say they hold $1 in cash, treasury bills, or other conventional financial assets for every unit of stablecoin.