Tether, the issuer of USDT, has reportedly been the subject of an investigation by the US Department of Justice for potential violations of anti-money laundering regulations.
Tether, the issuer of the USDT stablecoin, has reportedly been the subject of an investigation by the U.S. Department of Justice (DOJ) for potential anti-money laundering violations. The crypto market has experienced a selloff as a result of USDT’s loss of its dollar basis.
As per the Wall Street Journal (WSJ), U.S. officials are investigating Tether for potential violations of anti-money laundering and sanctions regulations.
Third parties may have utilized USDT to finance unlawful activities, including drug trafficking, terrorism, and cybercrime, or to launder the proceeds of these activities. The investigation is currently investigating this possibility.
Leading the investigation is the Manhattan U.S. Attorney’s office. The WSJ article also indicates that the U.S. Treasury Department may impose sanctions on Tether, which could potentially prevent Americans from using USDT in transactions.
He stated that the company had not informed the Wall Street Journal of any ongoing investigations into the company.
This scope of investigation could have significant implications for the crypto market, as USDT is the most extensively used and largest stablecoin by market capitalization.
Similar to the U.S. government’s filing of charges against Binance and its former CEO, Changpeng “CZ” Zhao, for alleged money laundering violations, an official crackdown on Tether could have a cascading effect on the market.
Tether has issued a statement in which it criticizes the Wall Street Journal for its “irresponsible reporting” that is characterized by “reckless allegations.”
Tether emphasized that the report was founded on “sole rank conjecture” and that the news outlet failed to incorporate the company’s collaboration with law enforcement to combat the illicit use of USDT.
The news of a prospective DOJ investigation has already caused USDT to lose its dollar basis, despite Tether’s denials. This has incited fear, uncertainty, and doubt (FUD) in the market. The report has reignited hysteria, which is evident in the recent depeg.
The market reaction has also resulted in a selloff, with the price of Bitcoin and other cryptocurrencies declining as a result. Subsequent to the report’s publication, Bitcoin plummeted from $68,000.
In the interim, Nic Carter of Castle Island Ventures proposed that the investigation may be politically motivated.
In an X post, he asserted that the Department of Justice (DOJ) is targeting Tether because of CEO Howard Lutnick’s political affiliations, citing that Lutnick is a “major Trump person.”
He claimed that the disclosure to the Wall Street Journal was deliberate, with the intention of undermining both Trump and the crypto sector.
This announcement follows Tether’s CEO Paolo Ardoino’s declaration that the company has no immediate intentions for a public offering.
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