DeFi analyst Cryptopainzy warns that what happened with Terra (LUNA) in 2022 could happen again. Concerns became evident yesterday as the largest stablecoin Tether (USDT) lost price stability…
Cryptopainzy says the LUNA crisis is threatening BTC this time too
DeFi analyst Cryptopainzy stated on June 15 that “USDT has $1.5 billion worth of BTC.” According to the analyst, under significant pressure, Tether may use its BTC reserves to maintain USDT price stability. Cryptopainzy also tagged Terraform Labs co-founder and LUNA founder Do Kwon in the tweet and said:
$1.5 billion BTC to maintain price stability, does this remind you of Do Kwon?
Tether manager Paolo Ardoino challenged
cryptocoin.com As we reported, yesterday, while USDT lost its dollar stability, manipulative transactions made by a certain group of whales drew attention. USDT had to deviate from the dollar constant due to the instability in Curve pools. Its price is still trading below the $1 threshold, according to CMC data. After falling to $0.9958 yesterday, it is holding around $0.998 today.
Meanwhile, Tether Chief Technology Officer Paolo Ardoino said on Twitter yesterday that the surge was a deliberate move. “The markets are tense these days, so it’s easy for attackers to take advantage of this general sentiment,” Ardoino said. But at Tether we are ready as always. Let them come. We are ready to use any amount,” he challenged.
Ardoino responded to the aforementioned LUNA allegations
The Tether executive explained that 1.5 billion in BTC was purchased using excess reserves representing the company’s equity. Ardoino shared that the company is currently in a state of overcapitalization of over $2.5 billion. This surplus is in addition to the 100% minimum reserves that Tether carefully maintains to cover all pending tokens. In response to Cryptopainzy’s LUNA claims above, he noted:
It was bought with 1.5 billion excess reserves in BTC, that is, with the company’s own equity. The company currently has more than 2.5 billion capital (above the minimum 100% reserve that we need to cover all outstanding tokens, among which the vast majority are treasury bills).
Additionally, on May 17, Tether announced its commitment to use up to 15% of its monthly net operating profits, which includes profits from bonds and similar investments, to purchase Bitcoin as part of its excess reserves.
Whales at work again…
According to Lookonchain, a whale wallet “0x3356” created a new address to deposit 52.5 million USDC while USDT lost its dollar peg. It later borrowed 40 million USDT on Aave and Compound protocols. Then, he deposited 40 million USDT on Coinbase and Kraken. This move started a series of lending processes in Aave V2. As a result, the USDT lending rate increased from 20% to more than 30%. Also, about 5 hours later, 2 other whales also sold 9.6 million worth of USDT.
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