The US Department of Justice (DOJ) has reportedly opened an investigation into USDT stablecoin issuer Tether for possible anti-money laundering violations. This development caused USDT to lose its dollar peg, leading to widespread crypto market declines.
The US Department of Justice is said to have begun exploring Tether.
The Wall Street Journal (WSJ) reports that the US government is investigating Tether for allegedly violating sanctions and anti-money laundering rules. The criminal investigation is also investigating whether third parties used USDT to fund illegal activities such as drug trafficking, terrorism, hacking, and money laundering.
The Manhattan federal prosecutor’s office is leading the investigation. Meanwhile, the WSJ report said that the U.S. Treasury Department is also considering possible sanctions and penalties against stablecoin issuers who do business with individuals or entities on the U.S. sanctions list. Such sanctions by the US Treasury could prohibit US persons from conducting transactions using USDT.
Commenting on the WSJ report, Tether CEO Paolo Ardoino told the Wall Street Journal in an X post that there is no indication the cryptocurrency company is under investigation. said. He added:
WSJ is regurgitating old noise. Full stop.
However, this development is definitely alarming given its potential impact not only on stablecoin issuers but also on the broader crypto market. USDT is the largest stablecoin by market capitalization and is widely used in the cryptocurrency market, so it can cause a domino effect in the market.
Moreover, such a development could bring the crypto market into sharp focus, similar to the situation when the US government charged top cryptocurrency exchange Binance and its former CEO Changpeng “CZ” Chao with violating money laundering laws. May cause panic.
USDT publisher condemns WSJ’s ‘irresponsible reporting’
The publisher of USDT issued a statement condemning the media’s irresponsible reporting. Tether said the Journal was irresponsible for writing a report with so much conviction that it was a “reckless assertion” without any of the authorities verifying the rumors or the names of the sources.
The cryptocurrency company said the article was based on “pure rank speculation,” even though it had already admitted to the Journal that it had no knowledge of any such investigation into the company. Tether also said the news platform had “carelessly” ignored the company’s well-documented and extensive dealings with law enforcement to crack down on bad actors using USDT and other crypto assets.
Despite the press release, the alleged investigation into Tether has already caused fear, uncertainty, and doubt (FUD) in the market as the USDT stablecoin has lost its dollar peg. This is not the first time something like this has happened, but this recent depegging is definitely due to the panic currently spreading in the market.
The panic led to a drop in the cryptocurrency market, with the price of Bitcoin and other coins plummeting following news of the alleged investigation. Following this report, BTC fell from $68,000.
Interestingly, Nick Carter of Castle Island Ventures suggested that the investigation into stablecoin issuers is politically motivated. In a post on X, he said the Justice Department is targeting Tether because Cantor Fitzgerald CEO Howard Lutnick is a “Trump bigwig.” Cantor Fitzgerald manages a portion of the USDT issuer’s reserve assets.
Carter added that the leak from the Justice Department to the Journal was deliberate and intended to harm Trump and the crypto industry in general. Meanwhile, this came just hours after Paolo Ardoino revealed that his company has no plans to go public at this time.
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Boluwatife Adeyemi
Boluwatife Adeyemi is an experienced cryptocurrency news writer and editor who has covered topics spanning DeFi, NFTs, smart contracts, blockchain interoperability, and more, among others. Boluwatife has a knack for simplifying the most technical concepts and making them easier for crypto beginners to understand. Outside of writing, he is an avid basketball fan and enjoys playing part-time.
Disclaimer: The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
