Key Points
- Federal prosecutors are conducting a criminal investigation into Tether over potential violations of anti-money laundering rules and sanctions, focusing on the use of its stablecoin in illicit activities including terrorism financing and drug trading.
- The US Treasury Department is considering imposing sanctions on Tether due to its alleged use by sanctioned entities, including Hamas and Russian actors, which could prevent Americans from conducting business with the company.
Federal Investigation Targets Stablecoin Giant
The Manhattan U.S. attorney’s office has launched a criminal investigation into Tether, the company behind the world’s largest stablecoin, according to The Wall Street Journal. The investigation centers on whether third parties are using Tether’s cryptocurrency for illegal activities, including terrorism financing, drug trafficking, and hacking operations.
Treasury Department Contemplates Sanctions
In a parallel development, the U.S. Treasury Department is evaluating potential sanctions against Tether, citing concerns over the stablecoin’s usage by sanctioned individuals and organizations. If implemented, these sanctions would effectively block American entities from engaging in business operations with Tether, significantly impacting its market presence in the United States.
Company Response and Historical Context
Tether’s leadership has strongly contested the reported investigations. CEO Paolo Ardoino took to social media platform X to dispute the WSJ’s report, stating, “There is no indication that Tether is under investigation. WSJ is regurgitating old noise.” A company spokesperson further characterized the article as “pure rank speculation.”
The current scrutiny adds to Tether’s history of regulatory challenges. Previously, the U.S. Commodity Futures Trading Commission (CFTC) found that Tether had made “untrue or misleading statements” regarding its stablecoin’s backing by U.S. dollars. The company has also faced calls from U.S. lawmakers for Justice Department investigations into its potential involvement in illicit finance.
Despite these challenges, Tether maintains that it actively collaborates with global law enforcement to combat illegal activities. The company emphasizes its commitment to regulatory compliance and its efforts to prevent the misuse of its stablecoin platform.
Neither the Treasury Department nor the U.S. Attorney’s Office for the Southern District of New York have officially commented on the reported investigations.
