The U.S. federal government is reportedly investigating Tether, a major stablecoin provider, according to an October 25 report by The Wall Street Journal (WSJ), which cites sources close to the issue.
The investigation, which is being led by the U.S. Department of Justice (DOJ), focuses on alleged criminal use of Tether’s stablecoin, USDT, by third parties, potentially for illegal activities such as money laundering. The investigation has reportedly been ongoing for a few years.
Meanwhile, the U.S. Department of Treasury is evaluating potential sanctions against Tether, as the stablecoin is widely used by sanctioned individuals and entities, such as the terrorist group Hamas and certain Russian arms dealers. The Oct. 25 report estimated that approximately USDT amounting to $190 billion is traded on a daily basis.
Tether responded to the article with a strong statement, refuting any claims of involvement in unlawful practices or sanctions evasion.
Tether went on to criticize the newspaper, stating that it acted irresponsibly by presenting unverified allegations without backing from official sources or on-record confirmations. The statement emphasized Tether’s cooperation with law enforcement and regulators to prevent misuse of its currency, as well as its efforts to block malicious actors within the crypto space.
Paolo Ardoino, Tether’s CEO, echoed this rebuttal on social media, stating that there’s no concrete indication that Tether is being investigated, calling the WSJ’s article “old noise.” Ardoino’s post on X reiterated that Tether remains committed to transparency and collaboration with authorities.
Over time, Tether has faced regular scrutiny from organizations including the UN and consumer advocacy groups. Given U.S. regulatory policies, the possibility of an ongoing investigation doesn’t appear far-fetched to some.
In a previous high-profile enforcement action, the CFTC imposed penalties on Tether and the related crypto exchange, Bitfinex, amounting to $42.5 million for Commodity Exchange Act violations in October 2021.
Despite the repeated criticisms, Tether points to a long history of working with regulators and law enforcement to combat misuse of its stablecoin. In August, it reported helping over 145 agencies recover over $108.8 million in USDT tied to criminal activities since its inception in 2014.
News of the ongoing federal investigation seems to have unsettled the crypto market, leading to notable price drops. Bitcoin, for example, slid from $67,367 to $66,016, showing only partial recovery afterward. Similarly, other cryptocurrencies like Ether, BNB, XRP, and Solana experienced dips, mirroring Bitcoin’s trend.
Leading enterprises like Marathon Holdings Inc. (NASDAQ: MARA) will continue to watch how these reports pan out since any legal proceedings against any crypto company can impact the trajectory of the entire industry.
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