- Tether has denied reports of an investigation by the U.S. Department of Justice, dismissing them as “old noise”
- The DOJ probe reportedly focuses on Tether’s potential role in money laundering and sanctions violations
- Lawmakers are pressuring the DOJ to scrutinize Tether and other crypto entities due to concerns over illicit financial networks
Tether has denied recent allegations that it is under investigation by the U.S. Department of Justice (DOJ) for potential violations of anti-money laundering and sanctions laws. The claims emerged through the Wall Street Journal on Friday, but CEO Paolo Ardoino dismissed them as “old noise,” insisting that Tether has not been formally notified of any active inquiry. Despite Ardoino’s remarks, multiple media reports suggest that DOJ scrutiny is intensifying around Tether’s potential role in facilitating restricted transactions, especially in markets where access to U.S. currency is limited.
DOJ Focuses on Tether’s Potentially Risky Role
The DOJ probe, reportedly spearheaded by the U.S. Attorney’s Office in Manhattan, is said to be investigating whether Tether’s stablecoin, USDT, has been used to fund activities such as drug trafficking, terrorism, and other illicit operations. According to sources close to the investigation, the DOJ is examining Tether’s compliance with U.S. sanctions laws, especially regarding transactions linked to sanctioned entities in regions like Russia and the Middle East.
The news led to a sharp drop in the value of almost all cryptocurrencies, but Ardoino responded forcefully, labeling the claims as repetitive and baseless:
As we told to WSJ there is no indication that Tether is under investigation. WSJ is regurgitating old noise. Full stop.
— Paolo Ardoino 🤖🍐 (@paoloardoino) October 25, 2024
Tether has highlighted its collaborations with law enforcement and regulatory bodies worldwide in recent months in an attempt to change the narrative, asserting that it regularly cooperates with agencies to prevent misuse of its platform.
Political Pressure for Action
Some U.S. lawmakers, including Senator Cynthia Lummis, have called for the DOJ to prioritize its investigation into Tether and other major crypto platforms. Lummis and others argue that the DOJ should swiftly assess the extent to which these platforms have enabled illegal financial networks, which, in their view, poses a significant risk to U.S. security. Lawmakers are specifically focused on halting any connections between stablecoins like USDT and sanctioned entities. The idea of a Tether implosion remains one of the few events left in the crypto world that has the potential to wreak short-mid term havoc, which explains the sell-off when the story broke.
