According to a Friday report, the United States Justice Department has launched a criminal investigation into stablecoin issuer Tether. The probe is reportedly meant to determine whether the company violated anti-money laundering rules and sanctions.
Bitcoin appeared set to break past $70,000, but the probe into Tether caused crypto prices to plummet. However, Tether CEO Paolo Ardoino has refuted the claims that U.S. law enforcement is investigating the crypto company.
Tether Facing DOJ Probe?
The Wall Street Journal reported on Friday that the federal government was investigating Tether for possible breaches of sanctions and anti-money laundering rules, citing anonymous individuals familiar with the matter.
The Manhattan U.S. attorney’s office is handling a criminal probe into Tether, while the Treasury Department has been looking into sanctioning Tether due to its use of the USDT stablecoin by U.S.-sanctioned people and groups such as Hamas. According to the Wall Street Journal, if the Treasury Department decides to initiate charges against Tether, it would block many Americans from doing business with the firm.
Earlier today, the crypto market was on an upsurge, with Bitcoin closing in on the $69,000 mark and perhaps bracing for a late Friday or weekend challenge of reaching the elusive $70,000 region. Shortly after the news emerged, BTC slumped to as low as $65,896, per data tracked by CoinGecko. At press time, the price had bounced a hair to $66,706, lower by 2% over the past 24 hours.
Tether Vehemently Denies Investigation Report
Added Tether CEO Ardoino quickly reacted to WSJ’s market-moving report.
“As we told to WSJ, there is no indication that Tether is under investigation,” Tether’s Ardoino wrote in a post on X. “WSJ is regurgitating old noise. Full stop,” he added.
Tether mints USDT — the market’s third-largest cryptocurrency after Bitcoin, Ethereum, and the largest stablecoin. Stablecoins are cryptocurrencies whose value is tied to another asset, typically the U.S. dollar.
CoinGecko data shows that USDT currently boasts a market cap of a staggering $120 billion and is the most-traded cryptocurrency, with a 24-hour trading volume of $52 billion.
However, Tether has been heavily scrutinized over USDT in recent years. The U.S. Commodity Futures Trading Commission, for instance, previously argued that Tether made “untrue or misleading statements and omission of material fact” related to the stablecoin. In 2021, The CFTC fined Tether $42.5 million for lying about USDT being fully backed by the U.S. dollar.
During the same year, Tether and its sister company Bitfinex agreed to halt all trading activity in New York as part of a settlement with the state’s Attorney General Letitia James. The two firms also agreed to a $18.5 million fine to end New York’s multi-month probe into their activities.