Tether Investigation by the US Government Is Underway: WSJ Report

Key Points:

• Tether investigation by U.S. authorities, including the DOJ and Treasury, is underway into USDT transactions used by sanctioned groups like Hamas and Russian arms dealers.
• According to WSJ, USDT facilitates around $190 billion in daily trades.

According to Wall Street Journal, the US Department of Justice and the Treasury Department have reportedly opened an investigation into Tether, the company behind the world’s largest stablecoin, USDT, for allegedly breaching anti-money laundering laws and allowing the bypassing of restrictions by people or entities under sanctions.

Read more: Tether Transparency Problems Are Coming Under Heavy Criticism

Tether Investigation Is Underway by the US Government

Led by the Southern District of New York, the DOJ’s Tether investigation has zeroed in on whether third parties used USDT to further illegitimate activity or launder suspicious funds. The investigation has reportedly been ongoing for years as an attempt to determine whether Tether’s extensive usage was able to cover illegal financial deals.

The U.S. Treasury Department is also investigating Tether’s possible involvement in international sanctions skirting. Officials are concerned that banned entities, such as Hamas and Russian arms dealers, could use Tether’s USDT token in financial deals because it is basically a digital dollar in international markets. According to the Wall Street Journal, there are about $190 billion in USDT trades daily.

Tether Investigation News Rocks the Crypto Market: CEO Paolo Ardoino Responds

Ranked as the third-biggest cryptocurrency by value, with a market cap of about $120 billion, USDT is particularly popular in jurisdictions that have restrictions on traditional currency exchanges. This extensive use and liquidity have placed it at the centre of recent government scrutiny over potential regulatory and security concerns.

Tether’s chief executive was quick to play down the allegations as “old noise,” contending in an X post, formerly Twitter, that at this moment in time, Tether is not under any investigation. As such, the report by the Wall Street Journal was misleading, underlined Ardoino, and there was “no indication” of direct action against Tether.

Still, the news of the Tether investigation sent cryptocurrency markets tumbling. Bitcoin slumped more than 2%, while Ether briefly sank under $2,400 before paring losses.