Tether Faces Federal Investigation Amid Allegations of Criminal Activity

YEREVAN (CoinChapter.com) — The Wall Street Journal revealed that Tether is under a federal investigation, alleging that the company’s stablecoin, USDT, may have been used in criminal activities. According to sources on Oct. 25, both the Justice Department and the Treasury Department are investigating Tether. The U.S. Attorney’s Office for the Southern District of New York is reportedly handling a criminal inquiry on the potential misuse of USDT, while the Treasury Department is exploring sanctions against Tether due to its alleged involvement with sanctioned entities. This Tether investigation has reportedly been ongoing for several years.

Tether’s regulatory history shows frequent scrutiny from authorities, and the company’s close connection to high-profile cryptocurrency transactions keeps it in the spotlight. The Treasury’s potential sanctions on Tether reportedly stem from accusations that USDT facilitates transactions for individuals or groups under U.S. sanctions, such as Hamas and other prohibited organizations.

Tether’s Reaction to Investigation Allegations

Tether quickly issued a response to the report, labeling it “outrageous.” In a statement, the company defended its actions:

“To suggest that Tether is somehow involved in aiding criminal actors or sidestepping sanctions is outrageous.”

Tether criticized The Wall Street Journal for “reckless allegations,” accusing the newspaper of making claims without direct confirmation from officials. The statement continues, underscoring Tether’s documented cooperation with law enforcement against illicit activity, including the misuse of USDT.

Tether CEO Paolo Ardoino further addressed the Justice Department Tether probe in an X post, referring to the claims as “old noise” and reiterating that no investigation has been confirmed by the authorities.

“As we told WSJ, there is no indication that Tether is under investigation. WSJ is regurgitating old noise,”

Ardoino said.

Overview of Tether’s Regulatory and Trading Status

The USDT daily trading volume was recorded at approximately $190 billion, highlighting its significant role in the cryptocurrency space. Tether’s legal issues are notable, with the stablecoin company repeatedly facing scrutiny. In 2021, Tether and its affiliated crypto exchange, Bitfinex, received a $42.5 million fine from the Commodity Futures Trading Commission (CFTC) for Commodity Exchange Act violations. Additionally, this fine added to the list of Tether’s regulatory history challenges, underscoring the continuous oversight the company faces from authorities.

In addition to these regulatory actions, Tether reported assisting over 145 law enforcement agencies in August. The company claims to have helped recover over $108.8 million in USDT connected to illegal activity. Despite the ongoing federal Tether investigation, the company maintains that it cooperates with authorities.

Industry Reactions and Ongoing Scrutiny on Tether

Notably, Tether remains a subject of debate within the cryptocurrency industry, attracting attention from various organizations, including the United Nations. Additionally, Ripple CEO Brad Garlinghouse commented on Tether’s regulatory history during a podcast in May, stating,

“The U.S. government is going after Tether, that is clear to me.”

He did not elaborate on the source of his insights.