Recent allegations against Tether, the company behind the USDT stablecoin, have sent ripples through the cryptocurrency market. According to a Wall Street Journal (WSJ) report, U.S. federal prosecutors are investigating Tether for potential anti-money laundering laws and sanctions violations. The probe is allegedly investigating whether third parties have utilized Tether’s stablecoin to finance illegal activities or to launder the money from such activities.
Key Allegations
The investigation reportedly focuses on whether third parties have used USDT to finance illegal activities, including:
- Drug trafficking
- Terrorism
- Cybercrime
- Money laundering
Additionally, the U.S. Treasury Department is allegedly considering sanctions against Tether due to its stablecoin’s popularity among sanctioned entities.
Tether’s Response
Tether has vehemently denied these allegations, dismissing them as “old noise” and “irresponsible reporting.” The company’s CEO, Paolo Ardoino, stated on social media that there is “no indication that Tether is under investigation.” In an official statement, Tether emphasized its commitment to combating illicit activities:
- Collaboration with over 180 law enforcement agencies across 45 jurisdictions
- Freezing of over 1,850 wallets tied to illegal activities
- Recovery of nearly $114 million in assets
- Blocking of $225 million connected to fraud before receiving legal orders2
Market Impact
The news has had a negative effect on the cryptocurrency market, with Bitcoin experiencing a 1.6% decline in the 24 hours following the report’s publication.
Impressive Financial Performance
While Tether has faced scrutiny in the past, including fines from the New York Attorney General’s office and the U.S. Commodity Futures Trading Commission (CFTC), the company has continued to grow. Its recent Q2 2024 Attestation Report showed strong financial performance, including:
- Record net operating profit of $1.3 billion for Q2 2024
- Ownership of $97.6 billion in U.S. Treasuries
- Consolidated net equity of $11.9 billion
However, the ongoing lack of a full independent audit remains a concern for some observers.
If true, the allegations against Tether could have significant implications for the crypto industry. However, Tether’s strong denials and recent efforts to enhance transparency and cooperation with law enforcement suggest that the company is taking steps to address regulatory concerns.
Share Information
If you have information about Tether or other stablecoin issuers and their activities, please share it with FinTelegram via our whistleblower platform, Whistle42.