Home > News > Business > Tether: US could ‘kill us’ after latest criminal investigation report
Stablecoin giant Tether has once again denied that it is a target of US law enforcement for allegedly violating economic sanctions and anti-money laundering (AML) regulations.
On October 25, The Wall Street Journal reported that the U.S. Department of Justice (DoJ) has issued a review of Tether regarding the use of the USDT stablecoin by and efforts by third parties involved in drug trafficking, terrorism, and cyber theft. reported that it is investigating. Parties laundering the proceeds of illegal activities. The investigation is reportedly being conducted by the U.S. Attorney’s Office for the Southern District of New York.
In the same report, the Journal claimed that the Treasury Department is investigating USDT’s role in helping organizations and individuals, including the terrorist organization Hamas and Russian arms dealers, evade U.S. economic sanctions.
The Treasury Department’s Office of Foreign Assets Control (OFAC) is considering adding Tether to the list of Specially Designated Nationals (SDNs) and Blocked Persons who are prohibited from accessing any U.S. financial channels. It has been reported. The majority of Tether’s statutory reserve assets.
The report did not provide many new details. Instead, it summarized reports from several years ago that federal agencies had begun investigating Tether for various crimes. The Journal previously reported that individuals associated with Tether used forged documents to obtain U.S. bank accounts because banks were unwilling to partner with scandal-plagued stablecoin issuers.
About six weeks ago, the Journal called USDT a “shadow dollar fueling the financial underworld” and accused Tether of “enabling a parallel economy beyond the reach of U.S. law enforcement.” The Journal also cited Congressional testimony in April from Deputy Treasury Secretary Wally Adeyemo, who called for additional tools to combat “offshore dollar-backed stablecoin providers” that operate under a “different set of rules.”
Lest we misunderstand what’s at stake here, Bloomberg published an article over the weekend quoting Hilary Allen, a law professor at American University’s Washington School of Law. Failure is big. ” Allen wasn’t saying Tether couldn’t fail, only that if USDT “went to zero tomorrow, it would be disastrous for the crypto economy.”
Allen added that as Tether’s market capitalization increases, federal authorities may become increasingly concerned that its collapse could cause contagion beyond the digital asset sector. “I don’t think we’ve reached the point where the entire financial system could collapse, but that’s no longer the case.”
please stop the madness once and for all
Tether quickly issued a statement calling the Journal’s “grossly irresponsible” statement because “authorities have no record confirming these rumors and no sources have been named.” condemned the article.
Tether has claimed that it has “no knowledge of any such investigation against the company,” apparently acting under the assumption that law enforcement agencies have a duty to inform those under investigation that they are the subject of an investigation. is.
Not content to stop there, Tether has announced that a WSJ article describes the extensive, well-documented efforts that law enforcement and Tether have taken to crack down on bad actors who seek to exploit Tether and other cryptocurrencies. “The transaction is being carelessly concealed.”
Tether omitted that it was only a few years ago that it publicly pushed back against OFAC’s request to freeze certain USDT tokens in wallets identified as belonging to individuals/entities on official sanctions lists. are. Tether suggested at the time that freezing wallets associated with a crime could thwart an active criminal investigation, so it might be best left to the criminals, er, authorities. .
Separately, Tether CEO Paolo Ardoino said the company “regularly and directly works with law enforcement authorities to prevent the misuse of USDt by rogue states, terrorists, and criminals.” “We will know if our company is under investigation,” he tweeted.
Ardoino also claimed that the Journal was “regurgitating old noise.” Full stop. ” However, Ardoino also applied “full stop” language in December 2020 to refute claims that the billions of dollars of USDT issued by Tether were not backed by an equal amount of legal reserves. What he did was noteworthy.
Shortly after this allegation, Tether was fined $42.5 million by the U.S. Commodity Futures Trading Commission (CFTC) for concealing the fact that the amount of USDT issued was not always backed by the New York Attorney General’s Office. An additional $18.5 million fine was also imposed from USD 1:1.
Tether also plans to reduce (a) its reserves, which include a significant amount of risky Chinese commercial paper, (b) its policy of issuing USDT only against the US dollar, and (c) its controversial “loans” It was discovered that he had lied about something. The destination of USDT is unknown.
So let’s assume that where there is smoke, there is fire. Full stop.
I’m a tether, baby, so won’t you kill me?
Ardoino appeared in person at the BTC-themed Plan B Forum in Lugano, Switzerland last week, but made a video-only appearance at the recent FinTech Week event in Washington, D.C. By contrast, Ardoino clearly has no concerns about Bitcoin’s possible existence. An example of an unsealed indictment that can be a hassle when trying to get through U.S. Customs.
Ardoino told an audience in Lugano that the purported reserve assets backing the $120.1 billion USDT in circulation include 82,454 BTC tokens (worth about $5.6 billion) and 48.3 tons of gold (worth about $4.2 billion). he said. He quickly tweeted that these numbers did not include the “approximately 100 billion in U.S. Treasuries” that (allegedly) make up the bulk of the reserves.
These Treasury bills are said to be held at Wall Street financial services firm Cantor Fitzgerald (NASDAQ: ZCFITX) (If you’re disgusted by this, consider how we feel ). Kantar CEO Howard Lutnick has repeatedly claimed to own Tether’s T-bills, but like Tether, he has never provided evidence to support these claims. do not have.
In the wake of its relationship with Cantor, Tether’s U.S.-based rival Circle, which issues the USDC stablecoin through a partnership with the Coinbase (NASDAQ: COIN) exchange, has announced that the U.S. federal government agency He suggested that if they really want to curb illegal activities related to Tether, they should just seize it. Kantar’s assets and tethers will fold like a cheap suit.
Ardoino acknowledged the threat in an interview with CoinDesk shortly before the Journal’s bombshell statement, saying, “If the United States wants to kill us, they can press a button and kill us anywhere.” . But Ardoino couldn’t help but antagonize the bull, claiming that USDT’s criminal ties were “a drop in the ocean” compared to crimes committed using the good old dollar.
Mr. Ardoino also promoted the false idea that Tether’s purchase of T-bills convinced the Fed not to embarrass one of the Treasury’s best customers. In fact, and I’m tired of pointing this out, Tether’s holdings are just a “drop in the ocean” (0.0028% to be exact) of the $36 trillion in outstanding Treasury bills.
We don’t need Steenkeen’s favor.
Cantor’s Lutnick co-chairs Donald Trump’s presidential transition team (if Trump wins against rival Kamala Harris) and is also one of Trump’s potential candidates for chief of staff. His name is mentioned. But Lutnick was criticized by anonymous opponents in Politico last week, who argued that the trip with members of Congress dealt not only with transition issues, but also with Kantar’s business interests, including its relationship with Tether. did.
There are several stablecoin bills that could be voted on in the post-election lame-duck Congress that would give USDC a clear regulatory advantage over USDT. Speculation is mounting that Mr. Lutnick is trying to persuade lawmakers to refrain from passing legislation that could advance Circle at the expense of Tether.
“We don’t expect political favors from anyone,” Ardoino told CoinDesk, but that doesn’t mean Tether won’t respond to favors when they come. After all, how can US-based exchanges like Coinbase and Kraken continue to facilitate USDT trading by US customers after the passage of the so-called “payment stablecoin” bill? It’s difficult to understand.
Losing access to the US market comes on top of Tether’s struggles in Europe, where it has refused to participate in the European Union’s Market for Cryptoassets (MiCA) regulatory framework. This summer, Circle received its first MiCA stablecoin permission, and exchanges like Coinbase have threatened to delist USDT by the end of the year if Tether fails to obtain its own permission.
Ardoino argued that MiCA’s stablecoin requirements, such as keeping 60% of fiat reserves in cash in European bank accounts, pose further risks to the stablecoin market. Ardoino believes that a bank failure that effectively wipes out a large portion of a stablecoin issuer’s reserves will lead to the failure of that stablecoin.
artificial internet
Last week, Ardoino told fintech officials in Washington, D.C., that Tether has no plans to go public. The rationale is ostensibly based on the idea that (a) Tether doesn’t need capital, and (b) retail investors will impede Tether’s ability to move quickly and break out (as opposed to conducting an audit). (promises made years in advance, etc.) Of course, Ardoino didn’t mention the additional scrutiny that would be required to prepare for a listing, one that Tether has spent its entire existence avoiding.
Still, it may only be a week or so before another half-baked quarterly “certificate” is published by Tether due to its inability/unwillingness to submit to an independent third-party audit. I don’t know. Recent versions of these certificates claim billions of dollars in profits earned from interest on purported T-bills, profits that Tether is investing in businesses far removed from its core product. .
These investments included a controlling stake in Northern Data and a BTC block reward miner that no longer wanted to mine BTC and focused solely on operating an AI data center. Northern Data’s self-reported financials have been dubbed “valuation voodoo,” so they fit very well under the Tether umbrella.
Continuing that trend, Ardoino announced the Tether local AI development kit on October 27th. He claims it “leverages peer-to-peer technology and focuses on privacy.” Ardoino included a video showing a “local, completely private translation app” that allegedly uses the SDK.
Honestly, Tether might be the winner here. Given the problem of AI “hallucinations” and Ardoino’s truth flexibility, Tether-powered AI should be second to none when it comes to creating meaningless facts out of thin air. Now, regarding branding…I think you’re more interested in Loco AI.
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