2021-7-27 00:13 |
Tether, the eponymous issuer of the USDT stablecoin, is on the hot seat with the U.S. Department of Justice. Bloomberg reported Monday that the DOJ is digging to determine whether or not the firm’s executives committed bank fraud years ago.
The DOJ Is Coming For TetherCiting three people familiar with the matter, Bloomberg revealed that federal prosecutors have opened a probe into Tether. In particular, they are investigating whether the company’s execs concealed the nature of their activities with banks, failing to disclose that some of the transactions were related to cryptocurrencies.
The said possible offense was committed in the early days of Tether and is seemingly unrelated to the long-standing allegations of Tether engaging in illegal market manipulation activities to prop up the price of bitcoin.
In response to the report of the DOJ investigation, Tether released a statement saying:
“Tether routinely has open dialogue with law enforcement agencies, including the U.S. Department of Justice, as part of our commitment to cooperation, transparency, and accountability. We are proud of our role as industry leaders in promoting cooperation between industry and government authorities in the U.S. and around the world.”
This is notably not the first time Tether has been in the crosshairs of mammoth government agencies. In 2018, for instance, the DOJ launched an investigation into whether Tether was manipulating crypto prices.
Moreover, at the end of April 2018, New York Attorney General Letitia James accused Tether and its sister firm Bitfinex of allegedly dipping into the reserves of USDT to cover up a loss of $850 million that had been compromised by Panama-based payment processor Crypto Capital Corp.
The two exchanges settled with NYAG for almost $19 million in February of this year. Still, Attorney General James stood by her claims that Tether issued USDT without proper USD backing. Tether and Bitfinex also agreed to present quarterly reports describing the composition of Tether’s reserves for the next two years.
BTC Bulls Don’t CareWhile Tether is the king of stablecoins, with a share of over 60% of the total stablecoin market, the Bloomberg report has not spooked bitcoin traders.
After dropping circa $1,000 shortly after the news surfaced, the bellwether cryptocurrency continues to trade above $39,000 at press time. It has gained over 14% on a 24-hour adjusted timeframe, with the bulls hell-bent on pushing the prices higher.
As Tether continues being the target of negative press, the regulatory focus on the burgeoning stablecoin universe is aggravating. Treasury Secretary Janet Yellen recently urged financial regulators to “act quickly” to establish a regulatory framework for stablecoins.
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