The U.S. government is investigating Tether, the world’s largest stablecoin, over concerns it may be linked to illegal activities yet again. This is not the first time Tether is locking horns with the US government, this is 19th time.
On Friday, the Wall Street Journal reported that senior officials from the Manhattan U.S. Attorney’s office are probing whether Tether has been used by others to fund illegal activities. Tether, which operates under the ticker USDT, is known for its pseudonymity and resistance to chargebacks, making it attractive for illicit purposes.
Tether’s legal troubles began in 2012 with lawsuits against Bitcoinica, a company linked to Tether’s sister firm, Bitfinex. Over the years, various government investigations have scrutinized Tether, including:
- 2015: Bitfinex acknowledges a Commodity Futures Trading Commission (CFTC) probe while USDT’s market cap stood at $451,000.
- 2016: Bitfinex settles a CFTC allegation for illegal trading with a USDT market cap of $2.9 million.
- 2017: Tether admits to not having a bank account with more than $61.5 million in cash, market cap reaches $418 million.
- 2018: The Department of Justice and CFTC launch a probe into Bitcoin price manipulation linked to USDT, whose market cap has surged to $2.5 billion.
- 2021: Tether pays $41 million in fines for misleading claims about its reserves, and its market cap rises to $70 billion.
- 2022: A Boston U.S. Attorney seizes 73,586 USDT linked to criminal activity and its market cap is $66 billion.
- 2023: Tether complies with requests from the DOJ and other agencies as its market cap reaches $90.8 billion.
- 2024: The latest investigation by the Manhattan U.S. Attorney’s office sees USDT’s market cap soaring to $120 billion.
Despite open questions surrounding Tether, its growth continues, especially after USDC briefly lost its $1 peg in March 2023. Even with new stablecoin launches from companies like PayPal, Tether dominates, bolstered by backing from Cantor Fitzgerald, led by Trump advisor Howard Lutnick.
“There is no indication that Tether is under investigation,” Tether CEO Paolo Ardoino posted on X after the news broke. “WSJ is regurgitating old noise. Full stop.”
However, news of a probe into Tether’s business raises concerns, echoing past impacts like FTX’s collapse. Tether’s role in crypto is even larger, as its stablecoin underpins much of the industry. Potential charges could parallel those against Binance for alleged money laundering and sanctions violations.
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