WSJ reports hedge funds are shorting Tether
The Wall Street Journal reports hedge funds are shorting Tether:
In the past month, more traditional hedge funds have executed trades to short tether through Genesis Global Trading Inc., one of the largest crypto brokerages for professional investors. These trades are worth “hundreds of millions” of dollars in notional value, said Leon Marshall, Genesis’s head of institutional sales.
...Genesis, which doesn’t take a view on tether, said the short trades are almost exclusively put on by traditional hedge funds in the U.S. and Europe, while crypto firms—especially those based in Asia—have been happy to facilitate the other side of the transactions.
...Some short sellers say they believe that most of tether’s commercial-paper holdings are backed by debt-ridden Chinese property developers, The Wall Street Journal previously reported. Tether said in a blog post this month that “these rumors are completely false.” The company added that it has been reducing its portfolio of commercial paper.
One side of this trade is going to lose - is it going to be Wall Street, or is it going to be buyers of Tether in Asia? So far, Tether's peg is holding and they are managing to make redemptions.
Because Tether has been under scrutiny for some years, they have been increasing their portfolio of US Treasury bills to withstand this type of attack. If another stablecoin fails, it is likely to be one not on the radar.