Hedge fund Fir Tree bets big with short of stable coin Tether

Hedge fund Fir Tree bets big with short of stable coin Tether
  • Fir Tree Capital Management, a hedge fund with $4 billion under management, recently announced it will bet big on a short position in Tether (USDT) and its sister company, Bitfinex.
  • A short squeeze is the practice of profiting from the sale of a short, or bets, against a long position. Hedge funds are currently shorting stablecoin, Tether, which has been linked to large-scale money laundering events, and has been called “the most suspect stablecoin”.
  • Stablecoin Tether (USDT) took a hit this week. The stablecoin, which promises USD value to users, has lost nearly $1.8B in value since its creation in 2017.
  • A hedge fund has reportedly invested heavily in a stablecoin called Tether, which could help the firm profitably gain market-moving power in the space.
  • The firm has long been accused of manipulating its own price to boost its own trading, and even created Tether, a digital cryptocurrency whose value supposedly reflects Bitcoin’s value, enabling them to do this with relative ease.

Fir Tree is betting its trade will pay off within 12 months

  • Fir Tree is a software engineering company that recently raised $15 million in Series A funding to build an AI assistant that learns from the way people use its chatbot to predict what they are searching for, then delivers relevant business news to their phone. The company envisions that this experience will be ubiquitous within 12 months.
  • The company is the first to get through the first round of the government’s Green Deal, which is aimed at tackling the UK’s climate crisis – which will involve switching the UK’s entire building stock to low-carbon heating and power by 2025.


  • Fir Tree has been shorting USDT since the last halving and has the largest short position of any fund of hedge fund. This hedge fund is highly controversial because no official audit has been made on the supply of USDT and its value relative to the market.
  • It is clear that the company has no more stablecoin Tether to cover its short, so it is forced to cover it with its own money, which means the company lost $2 billion, and the Tether price is back to $0.91, the short position will be closed.


For a hedge fund known as Fir Tree Capital, it appears to be a bet on the future of Tether, the stablecoin that has long been the target of accusations of being a Ponzi scheme. Fir Tree filed an SEC form in October revealing it had shorted Tether against the company’s long position, or bets that it would rise in value.