The issuer of USDT, Tether has published a blog post explaining why hedge funds attempting to short the stablecoin are using a thesis that shows a fundamental misunderstanding of both the cryptocurrency market and Tether.
The blog post stated an article written by the Wall Street Journal, “… more hedge funds have become interested in shorting Tether after the collapse in May of another stablecoin called TERA USD.”
Tether said that hedge funds viewing Terra’s collapse as a thesis to short USDT represents ‘the asymmetric knowledge gap between cryptocurrency market participants and entities in the traditional finance space.’
Tether pointed out that several misconceptions such as Tether holding significant Chinese commercial paper or Evergrande debt, that USDT is created “from thin air”, or that Tether has issued unsecured loans has been the basis of this short-selling movement.
In a blog post from a few days ago, Tether reaffirmed the fact that the company holds no Chinese commercial paper in its reserves.
Tether also said that the company is currently preparing an audit with a top 12 firm.
Its last financial disclosure on March 31 revealed that 85.64% of Tether’s financial backing is in cash and cash equivalents, including commercial paper.