Justin Sun’s TRON DAO Buys $1B of Tether (USDT) as it Briefly Falls to $0.97 By DailyCoin
Justin Sun’s TRON DAO Buys $1B of Tether (USDT) as it Briefly Falls to $0.97
- USDT has lost its peg and briefly fell to $0.97. It’s now trading at around $0.99.
- Justin Sun’s TRON DAO buys $1 billion worth of USDT tokens to stabilize the peg.
- Onchain data shows that Alameda Research opened a few short positions on USDT.
- Alameda is one of the largest buyers of USDT.
TRON DAO has purchased $1 billion worth of (USDT) tokens. This comes as the largest stablecoin loses its 1:1 peg to the U.S. dollar and briefly fell to around $0.97.
USDT is now trading at around $0.99 at the time of writing, according to data from TradingView.
TRON DAO said in a tweet they decided to purchase USDT to “safeguard the overall blockchain industry and crypto market.” The DAO first tweeted that it was going to purchase $300 million worth of USDT, but minutes later sent another tweet with the updated figure of $1 billion.
USDT, which has a market capitalization of $69 billion, started depegging in the early morning of Thursday. Data from Etherscan shows that Alameda Research, Sam Bankman-Fried’s crypto trading firm that’s rumored to be insolvent, has opened a few small short positions ranging from $250,000 to $500,000 on USDT.
Paolo Ardoino, chief technology officer at Tether, said on Twitter that the company has processed about $700 million worth of redemptions in the last 24 hours. Additionally, he insisted that the firm is facing “no issues.”
TRON’s founder and crypto billionaire Justin Sun is said to be creating a plan to save Sam Bankman-Fried’s FTX exchange after Binance pulled out of the deal to acquire its troubled competitor. It’s unclear whether the deal will include Alameda, which, together with Cumberland Global, is believed to have bought about two-thirds of all USDT currently in circulation.
Recent reports say that Alameda was on the edge of insolvency back in May when and its algorithmic stablecoin UST imploded. Bankman-Fried gave Alameda $4 billion to help it stay afloat. The cash injection included FTX users’ deposits.
Tether has also denied having exposure to Alameda and said that the firm bought USDT with USD and not FTT, FTX’s native token that has plummeted over 90% in value over the past few days.
It’s not the first time USDT has lost its peg, causing panic in the market. When Terra collapsed, USDT crashed to as low as $0.91 on some exchanges.
On the Flipside
- It’s unclear what’s causing USDT to lose its peg, as Alameda’s short positions are relatively small.
- There’s no information on the status of Alameda and its solvency.
- Critics say that Tether has yet to do an appropriate audit verifying the legitimacy of its reserves.
Why You Should Care
Tether is the issuer of the largest stablecoin, USDT. Most of the trading in the crypto markets is done with pairs denominated in USDT. If USDT continues losing its peg and starts facing liquidity problems, it might also be a devastating blow to the entire crypto industry.
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See original on DailyCoin