The U.S. federal government has intensified its scrutiny of cryptocurrency company Tether, investigating potential sanctions violations and anti-money-laundering laws, as reported by WSJ.
Led by the Manhattan U.S. attorney’s office, the criminal investigation seeks to determine whether Tether has been used by third parties to fund illegal operations such as drug trafficking, terrorism, and cybercrime, as well as to launder related proceeds.
Tether has emerged as a critical tool in sanctioned zones, prompting governmental scrutiny. The Treasury Department is considering suspending Tether, which would prevent Americans from transacting with the company, due to its use by sanctioned groups like Hamas and Russian arms dealers.
The Justice Department began investigating Tether years ago, initially focusing on whether some backers committed bank fraud using falsified documents to access the global banking system.
Tether denies any criminal involvement and recently called these allegations “outrageous,” highlighting its cooperation with U.S. and international law enforcement. The company pointed to efforts like freezing wallets and using analytics partners to monitor transactions, asserting that blockchain transparency helps deter criminality and supports authorities in tracking transfers.
Tether’s regulatory issues arise amid increased scrutiny in the cryptocurrency sector. Recently, Binance founder Changpeng Zhao was sentenced to four months in prison and fined $4.3 billion for anti-money-laundering violations.
Tether also paid $61 million in a prior settlement with New York regulators over asset misrepresentation. Potential criminal charges could affect Cantor Fitzgerald, which manages most of Tether’s $80 billion in reserves, under CEO Howard Lutnick, a Trump ally.
The Trump campaign did not comment on the federal investigation but commended Lutnick as a “renowned business leader and philanthropist,” noting his volunteer role as co-chair of the Trump-Vance Transition team.
