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US officials investigating Tether executives for bank fraud: report


www.theblock.co 26 July 2021 10:53, UTC
Reading time: ~2 m

U.S. officials are said to be investigating whether executives for the stablecoin operator Tether committed bank fraud, according to a Monday morning report by Bloomberg.

Per the report, the Department of Justice is "scrutinizing whether Tether concealed from banks that transactions were linked to crypto, said three people with direct knowledge of the matter who asked not to be named because the probe is confidential." The report said the investigation "is focused on conduct that occurred years ago, when Tether was in its more nascent stages."

Bloomberg reported that one of its sources said the DOJ has sent letters informing the recipients that they are targets of an investigation. "The notices signal that a decision on whether to bring a case could be made soon, with senior Justice Department officials ultimately determining whether charges are warranted," the outlet said.

Based on the Bloomberg report, it's not clear what specific conduct the DOJ is probing. However, the New York Attorney General's report into Tether, released earlier this year, offers a potential clue into where investigators are looking. 

The AG's office, which settled with Tether and crypto exchange Bitfinex in February after a years-long investigation, wrote that "[a]t no point did Tether inform its clients or the market that from at least June 1, 2017 until September 15, 2017, tethers were not in fact not backed “1-to-1” by USD held by Tether in a bank account. Rather, the funds ostensibly backing tethers had been held in an account under the control of its General Counsel, with the balance accounted for as a 'receivable' from Bitfinex." 

The Block reached out to Tether for comment but did not receive a response by press time. 

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