USDT has mostly recovered after dipping as much as 0.4% to trade under $0.996 earlier in the day.

A wave of whale sell pressure across centralized and decentralized cryptocurrency exchanges was attributed as behind the short-lived depeg event.

USDT has since been able to recover to around $0.999, only around 0.1% below is 1:1 peg to the US dollar.

Executives at Tether, the issuer of USDT, attempted to ease the market’s fears on Thursday.

The company’s Chief Technology Officer Paolo Ardoino said on Twitter that “at Tether we’re ready as always. Let them come. We’re ready to redeem any amount”.

Authorized accounts are able to swap USD dollars and USDT on a one-to-one basis via Tether’s platform.

So long as Tether is holding enough liquid assets in reserve to fulfil USDT redemption requests, USDT should be able to maintain its 1:1 peg to the US dollar.

Crypto Whales Attack USDT Peg

On-chain data revealed that a few large crypto whales may have been behind the attack on USDT’s peg.

According to on-chain analytics Twitter account @lookonchain, the depeg started when a whale of the address beginning with “0x3356” used 52.5 million USDC to borrow 40 million USDT.

The wallet then proceeded to deposit this USDT on Coinbase and Kraken, before then withdrawing an equivalent amount in USDC, implying the USDT had been sold for USDC.

Various sources, including @lookonchain, noted that another crypto whale with the wallet name “CZSamSun” was also active on the Aave version 2 protocol in borrowing substantial sums of USDT and then swapping this for USDC.

But Tether may have fought back.

As per @lookonchain, a wallet starting with “0xd275” withdrew 50,000 ETH tokens from Bitfinex, used this to borrow 59 million USDC and then used this to buy USDT, seemingly in an attempt to force USDT back to its peg.

Bitfinex is owned by the same company that owns Tether.

More FUD Incoming?

USDT may have fought off this latest attack from short-selling whales, but further FUD (fear, uncertainty and doubt) attacks could lay around the corner.

That’s because the New York Attorney General’s (NYAG) Office just handed over previously confidential documents about Tether’s reserves from back in 2021 to CoinDesk.

As part of a settlement agreed with the NYAG back in 2021, Tether was forced to produce quarterly reporting on its reserves for two years.

Since the settlement was reached, CoinDesk has been pushing for the NYAG to make these reports publicly available.

Up until now, Tether had been blocking these attempts in order to, it has claimed, “prevent the public dissemination of confidential customer data”.

However, Tether announced on Thursday that it has dropped its opposition to the NYAG handing these documents over to CoinDesk.

The stablecoin issuer said the decision demonstrates its “commitment to transparency”.

Among the documents now possessed by CoinDesk “are statements from Tether’s banks showing the full existence of our reserves”, Tether said.

The documents also “show how Tether has been applying best-in-class asset management concepts”, the firm added.

Still, Tether warned in its statement that CoinDesk may still attempt to spread FUD, as CoinDesk has “often misrepresented Tether’s position in the market in favour of its main competitor”, which is USDC.

Traders looking for another opportunity to trade a USDT depeg should keep a close eye on this story.

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