Bloomberg: American hedge fund took a short position against USDT

The American hedge fund Fir Tree Capital Management took a ‘significant’ short position against the stablecoin Tether (USDT). The vehicle bets on a decline in the value of the reserve securities of the issuer of the asset, Bloomberg reports, citing the firm’s clients.

According to the agency, Fir Tree found a way to short USDT within an асимметричной торговли, which implies risks small relative to potential profits.

The auditing firm Moore Cayman confirmed that as of July 30, 2021 USDT is 100% backed by the reserves of Tether Holdings Limited. At the same time, the collateral consisted of 49% of commercial securities worth $30.8 billion.

Analysts at Fir Tree assume that the bulk of the ‘paper’ reserve USDT is tied to Chinese developers. After the default of Evergrande—the largest developer in China—the local real estate sector has been in crisis.

In September 2021, Tether stated that the company «нет выпущенных Evergrande ценных бумаг». However, Bloomberg later found that the collateral backing the stablecoin включает краткосрочные кредиты to major Chinese companies.

According to the publication, Fir Tree began considering the possibility of a short position against Tether in July 2021. To this end, the firm conducted research, including with the involvement of external experts. The structure may also create a separate fund for this purpose if there is sufficient investor interest.

Fir Tree is not the only company taking a short position against Tether. A Genesis Global representative told Bloomberg that the broker ‘helps’ some asset managers by providing USDT loans or structured put options.

Earlier in July 2021, CoinDesk sent the New York State Attorney General’s office a request for documents on USDT reserves.

The issuer of the stablecoin has sought to bar disclosure of reserve data about the reserves. In January 2022, Tether again asked the court to protect information about USDT’s collateral.