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The US Department of Justice has launched a criminal investigation into stablecoin issuer Tether, according to a report on Friday. The investigation reportedly aims to determine whether the company violated anti-money laundering rules and sanctions.
Bitcoin was on the verge of surpassing $70,000, but the investigation into Tether caused the cryptocurrency’s price to plummet. However, Tether CEO Paolo Ardoino refuted claims that US law enforcement is investigating the cryptocurrency company.
Is Tether facing a Justice Department probe?
The Wall Street Journal reported Friday that the federal government is investigating Tether for violating sanctions and anti-money laundering rules, citing unnamed people familiar with the matter.
The U.S. Attorney’s Office in Manhattan is conducting a criminal investigation into Tether, and the Treasury Department is considering sanctions against Tether due to the use of the USDT stablecoin by U.S. sanctioned individuals and entities, including Hamas. According to the Wall Street Journal, if the Treasury Department decides to file charges against Tether, many Americans will be unable to transact with it.
Earlier today, the cryptocurrency market was on an uptrend, with Bitcoin approaching the $69,000 level and preparing for a challenge to reach the elusive $70,000 area, likely late Friday or over the weekend. Immediately after this news came out, BTC fell to $65,896, according to data tracked by CoinGecko. As of this writing, the price has soared to $66,706, down 2% in the past 24 hours.
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Tether vehemently denies investigation report
Tether CEO Ardoino added that he was quick to react to WSJ’s market-moving report.
“As we told the Journal, there is no indication that Tether is under investigation,” Tether’s Ardoino wrote in a post to X. “WSJ is regurgitating old noise. Full stop,” he added.
Tether mints USDT, the third-largest cryptocurrency on the market after Bitcoin, Ethereum, and the largest stablecoin. A stablecoin is a cryptocurrency whose value is tied to another asset, usually the US dollar.
According to data from CoinGecko, USDT currently boasts a staggering market capitalization of $120 billion and is the most traded cryptocurrency with a 24-hour trading volume of $52 billion.
However, Tether has come under intense scrutiny in recent years over USDT. For example, the U.S. Commodity Futures Trading Commission previously alleged that Tether made “false or misleading statements and omissions of material fact” in connection with stablecoins. In 2021, the CFTC fined Tether $42.5 million for lying about USDT being fully backed by the US dollar.
That same year, Tether and its sister company Bitfinex agreed to cease all trading activity in New York as part of a settlement with state Attorney General Letitia James. The companies also agreed to pay an $18.5 million fine to end a months-long investigation into their activities by New York state.
