Bloomberg: Hedge funds have held USDT short positions for months, Tether clarifies again

As SBF is set to stay in a Bahamian jail until the extradition hearing on 2/8, the FTX incident may temporarily come to a close. However, Bloomberg has quickly turned its attention to the perennial ticking time bomb Tether. According to sources familiar with the matter, multiple hedge funds have held short positions in USDT and are waiting to cash out, prompting a strong backlash from Tether.

Tether Crisis?

Bloomberg cited sources and outlined the potential crisis facing USDT:

1. Hedge Funds Prepare to Target USDT

Both Fir Tree Capital Management and Viceroy Research have held USDT short positions for several months, waiting to cash out.

Valiant is considering shorting USDT again after doing so earlier this year.

Citron Research founder Andrew Left mentioned the lack of suitable trading tools.

Fir Tree, Viceroy, Valiant, and Coatue representatives declined to comment.

2. US Department of Justice Investigating Tether

The report mentioned that the US Department of Justice has been investigating Tether, with prosecutor Damian Williams, who handled the SBF case, leading the investigation.

3. Audit Reserves and Other Concerns

• In 2018, Tether allegedly redirected funds to compensate for reserve losses to the Panamanian entity Crypto Capital Corp. Besides Bitfinex's announcement, articles by Bloomberg and the New York Attorney General's Office have been deleted.

• Without audits, only quarterly transparency updates are available, with the big four accounting firms refusing to participate.

• Tether's CFO Giancarlo Devasini had a previous career as a plastic surgeon.

Tether's Response

In a statement, Tether pointed out that Bloomberg attempted to link the FTX crisis to Tether, suggesting that Bloomberg's inexperienced editorial team may unwittingly or intentionally become tools for short sellers.

Tether emphasized that with institutions like Genesis, BlockFi, Voyager, Celsius defaulting, the funds available for shorting USDT are diminishing, as individuals prefer to hold onto their USDT rather than lend it to speculative third parties.

Tether concluded by stating:

While this may be news to some journalists who are just beginning to cover the crypto industry, "shorting Tether" is a nearly decade-long, organized business activity that has seen multiple failures.