Tether, a cryptocurrency firm, is currently facing federal scrutiny regarding potential violations related to sanctions and anti-money laundering, as reported by the Wall Street Journal.
The investigation, spearheaded by the Manhattan US Attorney’s Office, is looking into the possibility that Tether’s stablecoin, USDT, has been used by various parties to assist in illegal activities, which may include drug trafficking, terrorism, and cybercrime, or to launder money from these activities.
Links to Terrorism and Arms Trade
According to the report, there is consideration within the US Treasury Department to impose sanctions against Tether due to its stablecoin’s prevalence among already sanctioned individuals and groups.
This scrutiny arises from alleged connections to terrorist groups like Hamas and Russian arms dealers, prompting heightened examination of Tether by global authorities.
Should sanctions be enacted, Tether would be prohibited from conducting business with US enterprises, which could severely affect its operations.
Tether’s Reaction to the Investigation
The Justice Department’s investigation into Tether is not a recent development; it began years ago, initially centered on accusations that certain Tether supporters might have engaged in bank fraud by using falsified documents to access the global banking system.
Tether has responded by asserting it has not received any indication of facing a significant investigation, calling the allegations of assisting criminal enterprises and evading sanctions “outrageous.”
The firm has consistently expressed its commitment to collaborating with US and international law enforcement to prevent illegal activities, which they believe is evident in their operation practices.
For instance, Tether has collaborated with analytical companies like Chainalysis and TRM Labs to improve transaction oversight, and has effectively frozen wallets linked to criminal entities in partnership with various governments.
CEO Paolo Ardoino addressed the situation on social media platform X (previously known as Twitter), stating:
As we told to WSJ there is no indication that Tether is under investigation. WSJ is regurgitating old noise. Full stop.
Image sourced from DALL-E; chart credit to TradingView.com
