If LUNA has taught us anything, it’s that stablecoins aren’t always safe. But two years after Terra’s catastrophic collapse, companies like stablecoin giant Tether are unlikely to blame the industry. Or can it?
According to the Wall Street Journal, the US federal government is investigating Tether for allegedly violating sanctions and anti-money laundering laws. Specifically, Manhattan prosecutors are investigating whether Tether was used to support illegal activities such as drug trafficking, terrorism, and hacking.
The Treasury Department is also investigating sanctions against Tether, given its popularity among U.S.-sanctioned organizations such as Hamas and Russian arms dealers.
The study comes on the heels of the company’s record profits, with revenue of an impressive $5.2 billion in the first half of 2024 alone.
According to recent reports, the number of stablecoin transactions has recently seen a record surge. Stablecoin liquidity soared to an all-time high of $169 billion late last month, reflecting 31% growth since the beginning of the year.
Tether’s USDT maintained its leading position, with its market capitalization expanding by $28 billion to nearly $120 billion, accounting for 71% of the market. Approximately $190 billion is traded every day in Tether, the world’s most traded cryptocurrency.
However, these deals were linked to several U.S. companies, including “North Korea’s nuclear weapons program, Mexican drug cartels, Russian arms companies, Middle Eastern terrorist organizations, and Chinese manufacturers of chemicals used to make fentanyl.” is related to national security concerns, The Wall reported. Street Journal.
These suspicions are not new. Cyber Capital founder Justin Bonds recently slammed Tether, calling it “one of the biggest existential threats to cryptocurrencies as a whole” and calling it “an $118 billion fraud, a scam linked to FTX and Bernie Madoff.” “It’s bigger than the rest of us combined.” Since then, Tether’s market cap has risen to $120 billion.
1/17) Tether is a $118 billion scam. Bigger than FTX and Bernie Madoff combined!
There is no proof of reserves and it has never been audited. USDT is printing counterfeit banknotes (fraud)
Arrested for falsifying documents, concealing identity, and lying about reserves
Stop using USDT now. 🧵
— Justin Bons (@Justin_Bons) September 14, 2024
Bonds has accused USDT issuers of printing counterfeit money, falsifying documents, concealing their identities and lying about their reserves. “There has never been any proof or audit of reserves,” he said.
“This means we have to take their word for it, as the vast majority of reserves cannot be independently verified. In 2018, the first company to attempt an audit was also fired for being too thorough. It was done!”
Bonds’ remarks were made more than a month ago, but the timing seems appropriate as Tether recently revealed the breakdown of its reserves. Speaking at the Lugano PlanB event in Switzerland, Tether CEO Paolo Ardoino revealed that Tether holds $100 billion in U.S. Treasuries and over 82,000 Bitcoins worth $5.5 billion. I made it.
“All Tether tokens are pegged 1:1 with the corresponding fiat currency and are 100% backed by Tether’s reserves,” Tether’s website states.
Ardoino blamed the Wall Street Journal article for sparking the FUD surrounding the token. Regarding X, he refuted the article’s claims, saying, “As we told the Journal, there is no indication that Tether is under investigation. The Journal is regurgitating the same old noise. We have stopped it completely.”
As we told WSJ, there is no indication that Tether is under investigation. WSJ is regurgitating old noise. Full stop.
— Paolo Ardoino 🤖🍐 (@paoloardoino) October 25, 2024
“We work regularly and directly with law enforcement authorities to prevent the misuse of USDT by rogue states, terrorists, and criminals. Based on that, we can confirm that the allegations in the article are true.”The article is clearly false. ”
In the article itself, the Wall Street Journal quoted Tether as dismissing the allegations. “It is outrageous to suggest that Tether is in any way involved in supporting criminals or evading sanctions,” the Wall Street Journal quoted Tether as saying. “We are actively cooperating with U.S. and international law enforcement agencies to combat illegal activity.”
Nevertheless, the Justice Department’s investigation into Tether began several years ago and initially focused on alleged bank fraud by Tether supporters. Tether has increased oversight of how its cryptocurrency is used, arguing that blockchain transparency makes criminal activity less likely to be detected. Tether even paid $61 million in a previous settlement over accusations that it misrepresented the assets backing its currency.
Tether recently announced plans to explore financing opportunities in the commodity trading space. The move is seen as a direct response to the challenges faced by small commodity trading companies, which often struggle to secure the necessary credit facilities from traditional lenders. Tether’s involvement could provide a lifeline, less regulation and potentially more flexible financing options.
Stablecoin Giant Tether Eyes Commodity Market
Tether, which operates the world’s largest stablecoin USDT, is making a bold move into the commodity market, signaling significant expansion beyond its traditional cryptocurrency-centric business.
With billions of dollars in reserves, Tether is looking for new ways to leverage its capital. Attractive opportunities exist in commodity markets, with their vast assets and complex trading dynamics.
other places
Hong Kong doubles down on AI and cryptocurrencies to maintain financial dominance
The city’s strategic approach to both AI and cryptocurrencies has positioned it as a leading financial center for the digital age.
Hong Kong streamlines licensing, establishes advisory board for virtual asset platforms
The city’s securities regulator is taking steps to foster a robust fintech ecosystem, including streamlining the licensing process for virtual asset trading platforms and establishing an advisory board.
South Korea imposes restrictions on cross-border virtual currency transactions
South Korea strengthens virtual currency trading rules to curb foreign exchange crimes, requires companies to register and report data to strengthen surveillance by 2025
Japanese financial giant seeks regulatory approval for Bitcoin and Ethereum ETFs
Japanese financial giants, including banks and crypto companies, ask regulators to approve crypto ETFs and reduce crypto tax rate from 55% to 20%
“Blockbuster-Netflix Moment”: Crypto industry mocks Microsoft board for not wanting to invest in Bitcoin
Microsoft has advised shareholders to reject proposed investments in Bitcoin, a decision that has drawn harsh criticism from the crypto community.
block cast
This week’s Blockcast features Augustine Huang, founding partner of SOFA.org. SOFA is a decentralized, non-profit, open-source DAO dedicated to developing a trustless DeFi ecosystem that allows for atomic settlement of financial assets on blockchain.
A fan chat with host Takatoshi Shibayama focused on the role of structured products in cryptocurrencies, the types of structured products available to investors, how they work, and how investors can use structured products to take advantage of volatility. guess.
Blockcast 45 | Crypto Structure Products with Augustine Fan from SOFA.org
The former Goldman Sachs trader and macro analyst shares his journey into crypto after a decade on Wall Street, his views on the macro environment and how it impacts the crypto market. , and why we need “creative destruction” in today’s industry.
event
Singapore Fintech Festival (Singapore 6-8 November 2024)
As 2025 approaches, financial leaders face the challenge of navigating a landscape transformed by AI, data, and digital platforms that are rewriting the rules of global trade, commerce, and financial services.
At Singapore FinTech Festival 2024, hear from global leaders like Microsoft, Goldman Sachs, PayPal, and Tencent about the strategies that are shaping the future of finance. With over 66,000 participants from 150 countries and over 10,000 organizations, everyone is here.
Click to see who will be attending and who you can network with at #SFF2024. Blockhead is proud to offer a 20% discount on tickets via this link.
GeckoCon (Bangkok, November 11, 2024)
GeckoCon is back. This year, we’re diving into the revolutionary world of Web3 gaming. See how the fusion of blockchain and traditional gaming is creating a whole new layer of entertainment. Don’t miss it. Visit CoinGecko today to secure your spot at the first-ever hybrid conference in Bangkok, Thailand. Or even from the comfort of your home!
Get your tickets now using Blockhead’s 40% code: BHGC24
(Limited to 30 redemptions, valid until October 31, 2024)
(Edited) (Bangkok, November 9-11, 2024)
(REDACTED) The conference will bring together some of the brightest minds in technology for a three-day game-changing event from November 9th to 11th, 2024 at Avani Riverside Hotel. The gathering was held just before Devcon and promises to be a pivotal moment for the convergence of artificial intelligence and Web3.
Interested readers can apply for free tickets here and sign up for the hackathon here.
Devcon (Bangkok, November 12-15, 2024)
Following Devcon Bogotá in 2022, the Ethereum Foundation will host Devcon SEA, the seventh edition of its leading developer and community conference.
This groundbreaking event is expected to bring together a diverse group of people, including developers, researchers, academics, and community members, to explore the future of Ethereum and its potential to reshape society.
Tickets can be purchased here, with discounts available for local builders, students, teachers and youth.
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