As a seasoned analyst with extensive experience in the volatile world of cryptocurrencies, I find myself constantly navigating the complexities and uncertainties inherent in this burgeoning industry. The latest news about the United States federal government’s investigation into stablecoin issuer Tether is yet another chapter in this intriguing narrative.
According to an exclusive report by The Wall Street Journal on October 25, sources close to the situation claim that the U.S. federal government is conducting an investigation into Tether, a company responsible for issuing stablecoins. Tether’s CEO, Paolo Ardoino, dismissed the allegations as old rumors, but the news caused ripples in the cryptocurrency market.
Justice, Treasury Departments looking at Tether?
Based on reports from a newspaper, it appears that the U.S. Attorney’s Office in the Southern District of New York (equivalent to the Justice Department) has been conducting a criminal probe into whether Tether (USDT) is being misused by external entities for illegal activities such as money laundering associated with those illicit actions. This investigation, it seems, has been ongoing for several years.
At the same time, reports indicate that the Treasury Department may be contemplating imposing penalties on Tether due to its extensive usage by entities and organizations under U.S. sanctions, such as the militant group Hamas and Russian weapons traders, according to a newspaper article.
The Wall Street Journal calculated that up to $190 billion in USDT is traded daily.
According to the newspaper’s report, Tether firmly denies any allegations suggesting they assist criminals or circumvent sanctions. On their own website, they even more explicitly declare such insinuations as preposterous.
“It is wildly irresponsible for WSJ to write articles with reckless allegations with such certainty when no authorities have gone on the record to confirm these rumors, and no sources are named.”
Additionally, the article fails to provide adequate attention to Tether’s widely reported interactions with law enforcement aimed at stopping unscrupulous users trying to manipulate Tether and other digital currencies, as stated by Tether.
Tether CEO Paolo Ardoino was also dismissive of the claims. He said in an X post:
“As we told to WSJ there is no indication that Tether is under investigation. WSJ is regurgitating old noise. Full stop.”
What the record shows
Tether frequently faces criticism from various entities, including international bodies like the United Nations and non-governmental organizations focused on consumer protection. Considering the current regulatory climate in the U.S., it’s not surprising that there are allegations of an ongoing investigation against Tether.
In October 2021, Tether and its associated cryptocurrency exchange, Bitfinex, were collectively fined $42.5 million by the U.S. Commodity Futures Trading Commission (CFTC) for breaches of the Commodity Exchange Act and a previous CFTC directive.
Ripple CEO Brad Garlinghouse commented during a podcast in May, “The US government is going after Tether, that is clear to me.” He did not elaborate on the source of his insight.
Tether, as a matter of public record, has a history of working with law enforcement authorities. In August, it stated that it had assisted over 145 different law enforcement agencies in the United States recover approximately $108.8 million worth of USDT linked to illicit activities since its debut in 2014.
The crypto market reacts
News of the investigation seems to have rattled the broader crypto markets.
Bitcoin (BTC) dipped from $67,367 to $66,016 and is currently still in the process of recovering partially as we speak. Similarly, Ether (ETH) dropped from $2,505 to $2,461. Likewise, BNB (BNB), Solana (SOL), XRP (XRP), and other significant cryptocurrencies displayed similar trends.
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2024-10-25 23:36