Tether, the issuer of the world’s largest stablecoin USDT, has announced that the Wall Street Journal (WSJ) has published a report stating that the company is under investigation by US federal authorities for suspected money laundering violations. He is taking a defensive stance.
The report cited anonymous sources as saying that the U.S. attorney’s office in Manhattan is scrutinizing whether Tether is being used by third parties to facilitate illegal activities such as drug trafficking, terrorist financing, and hacking. He claimed that there was. It also indicated that investigators were looking into whether Tether was indirectly supporting sanctioned organizations, including Russian arms dealers and groups like Hamas.
Bitcoin prices plummeted to just over $65,000 after the Wall Street Journal revealed a federal investigation into Tether/USDT. Source: Brave New Coin Bitcoin Liquid Index
The news immediately sent ripples through the crypto market, highlighting the important role Tether plays in the digital asset ecosystem. Bitcoin, the world’s leading virtual currency, saw its price drop significantly following this report, dropping from about $67,000 to $65,000. Given that USDT is widely used as a stable store of value and medium of exchange within the cryptocurrency space, this short but significant decline reflects the market’s sensitivity to any negative developments surrounding Tether. highlighted.
Transparency concerns and expansion plans under regulatory scrutiny
Tether CEO Paolo Ardoino was quick to respond to the allegations, vehemently denying them on X and in a company blog post. He called the Journal’s report “stale noise” and “irresponsible” and stressed that Tether had not seen any evidence of a federal investigation. Mr. Ardoino also emphasized that the company actively cooperates with law enforcement agencies, saying that Tether regularly works with authorities to prevent the misuse of USDT for illegal activities and to protect against cybercriminals and fraudsters. He said he was assisting in the arrest.
But the incident has reignited concerns about Tether’s transparency and regulatory compliance, issues that have plagued the company for years. Critics have long questioned the adequacy of Tether’s audits and the composition of its reserves, which are supposed to back USDT’s value on a one-to-one basis with the US dollar.
A recent report from Consumers Research further fuels these concerns, accusing Tether of failing to conduct a full audit of its dollar reserves and suggesting that Tether may have been used to evade international sanctions in Venezuela. and questioned its business operations in countries such as Russia.
Despite continued scrutiny, Tether continues to pursue ambitious expansion plans aimed at solidifying its position as a dominant player in the stablecoin market. The company is reportedly considering entering the commodities space, potentially leveraging stablecoins to facilitate trade and financing in this traditionally opaque market. Tether recently partnered with Tron Network to launch the T3 Financial Crimes Unit, a specialized financial crimes unit focused on combating cybercrime and strengthening platform security. However, some observers question the logic of choosing to partner with Tron, given Tron founder Justin Sun’s recent SEC fraud charges.
