Recent revelations regarding an ongoing U.S. federal government investigation into stablecoin issuer Tether have set the cryptocurrency market on edge. Reports originating from The Wall Street Journal, referencing unnamed sources, claim that the U.S. Justice Department is conducting a criminal investigation into possible illicit use of Tether’s USDT token. The probe reportedly focuses on whether the token was used to fund illegal activities or launder money, a process claimed to have been underway for several years.
Besides the Justice Department, the Treasury Department is also allegedly weighing the possibility of sanctioning Tether, spurred by concerns over the crypto token’s use by U.S sanctioned entities. The Treasury’s apprehensions allegedly stem from Tether’s utility among entities under US sanctions, which reportedly includes Hamas and Russian arms dealers.
The Wall Street Journal’s analysis demonstrates a daily trade volume encompassing nearly $190 billion in USDT. Despite such figures, Tether denied any involvement in facilitating illicit activities or evading sanctions, branding the allegations as “outrageous.” The firm emphasized that no authorities have confirmed the rumors and denounced The Wall Street Journal’s report for not providing any named sources to stand with the claims. Tether also highlighted its substantial efforts to work with law enforcement to combat misuse of its cryptocurrency.
Tether’s chief, Paolo Ardoino, dismisses the allegations, simply referring to them as “old noise.” His statements attempt to refute the claim that his firm is under any investigation. Still, such controversy isn’t entirely new to Tether— it has faced criticism on prior occasions from entities like the United Nations and non-profit consumer protection organizations. Its association with Bitfinex, a cryptocurrency exchange, also saw them collectively fined $42.5 million by the Commodity Futures Trading Commission (CFTC) recently.
Speculation around this investigation has visibly affected the cryptocurrency markets, disrupting the stability of several major crypto currencies such as Bitcoin, Ether and others. Several industry insiders have commented on the situation, including Ripple CEO Brad Garlinghouse, who said during a podcast that it was clear to him that the U.S. government is actively pursuing Tether.