US DOJ Allegedly Launches Investigation Into Tether

The US Department of Justice (DOJ) has allegedly launched an investigation into the USDT stablecoin issuer Tether for potential anti-money laundering violations. This development has caused the USDT to lose its Dollar peg and led to a widespread crypto market selloff.

US DOJ Allegedly Launches Probe Into Tether

According to a report by the Wall Street Journal (WSJ), the US government is allegedly investigating Tether for possible violations of sanctions and anti-money laundering rules. The criminal investigation is also looking into whether third parties have used USDT to fund illegal activities such as the drug trade, terrorism, hacking, and money laundering.

The Manhattan US Attorney’s office is leading this investigation. Meanwhile, the WSJ report stated that the US Treasury Department is also considering potential sanctions and penalties against the stablecoin issuer for doing business with individuals and groups on the US sanctions list. Such sanctions by the US Treasury could potentially prohibit Americans from conducting transactions using USDT.

Commenting on the WSJ report, Tether CEO Paolo Ardoino mentioned in an X post that they had told the Wall Street Journal that there is no indication that the crypto firm is under investigation. He added,

WSJ is regurgitating old noise. Full stop.

However, this development is undoubtedly concerning, considering the impact that it could have on not just the stablecoin issuer but the broader crypto market. USDT is the largest stablecoin by market cap and is widely used in the crypto market, so it could spark a domino effect in the market.

Moreover, such a development can cause panic in the crypto market, similar to the situation when the US government charged the top crypto exchange Binance and its former CEO Changpeng “CZ” Zhao with violating money laundering laws.

USDT Issuer Slams WSJ’s “Irresponsible Reporting”

The USDT issuer has released a statement slamming the media outlet’s irresponsible reporting. Tether mentioned that WSJ was irresponsible for writing the report with “reckless allegations” and such certainty without any of these authorities confirming the rumors or sources’ names.

The crypto firm mentioned that the stories are based on “pure rank speculation,” despite already confirming to WSJ that it did not know about any such investigations into the company. Tether also remarked that the news platform “carelessly” left out the firm’s well-documented and extensive dealings with law enforcement to crack down on bad actors using USDT and other crypto assets.

Despite the press release, the alleged investigation into Tether is already causing fear, uncertainty, and doubt (FUD) in the market as the USDT stablecoin has lost its Dollar peg. This isn’t the first time this is happening, although this recent depeg is undoubtedly due to the current widespread panic in the market.

This panic has led to a crypto market selloff, with the Bitcoin price and the prices of other coins tumbling on the news of this alleged investigation. BTC dropped from $68,000 following the report.

Interestingly, Castle Island Ventures’ Nic Carter suggested the investigation into the stablecoin issuer is politically motivated. In an X post, he mentioned that the DOJ is targeting Tether because Howard Lutnick, CEO of Cantor Fitzgerald, is a “big Trump guy.” Cantor Fitzgerald manages some of the USDT issuer’s reserve assets.

Carter added that the leak from the DOJ to WSJ was deliberate and meant to hurt Trump and the crypto space in general. Meanwhile, this comes just hours after Paolo Ardoino revealed that his company has no plans to go public at the moment.

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Boluwatife Adeyemi

Boluwatife Adeyemi is a well-experienced crypto news writer and editor who has covered topics that cut across DeFi, NFTs, smart contracts, and blockchain interoperability, among others. Boluwatife has a knack for simplifying the most technical concepts and making it easy for crypto newbies to understand. Away from writing, He is an avid basketball lover and a part-time degen.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.