News: The U.S. government is investigating cryptocurrency company Tether for possible violations of anti-money laundering (AML) and sanctions laws, The Wall Street Journal reported, citing anonymous sources.
Criminal investigators are looking into whether the token, also known as Tether, was used to finance drug trafficking, terrorism or other illegal activities, the newspaper said.
Background: The investigation is being conducted by prosecutors in the U.S. Attorney’s Office in Manhattan, while the Treasury Department is investigating Tether for its use by U.S.-sanctioned individuals and entities, including Hamas and Russian arms dealers. We are considering sanctions. Such sanctions would prohibit Americans from doing business with Tether.
The cryptocurrency company has faced regulatory challenges in the past, including a US$61 million ($92 million) settlement over misrepresentation of assets. The newspaper said criminal charges against Tether would also be bad news for Cantor Fitzgerald, which controls much of Tether’s $80 billion in reserves.
Tether announced last month that it had frozen approximately 1,850 crypto wallets and recovered approximately US$114 million in assets.
What they said: Tether told the newspaper it was not aware of the broader investigation.
“It is outrageous to suggest that Tether is in any way involved in aiding criminals or evading sanctions,” the company told the paper. “We are actively cooperating with U.S. and international law enforcement agencies to combat illegal activity,” it added.
