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US DOJ Reportedly Investigating Tether Over Bank Fraud In Early Years

Legal

coinfomania.com 26 July 2021 12:31, UTC
  
Reading time: ~2 m

The United States Department of Justice (DoJ) is reportedly probing the company behind popular stablecoin Tether (USDT) for allegedly committing bank fraud during its early stages. Three sources familiar with the matter told Bloomberg today that the DoJ is trying to identify whether Tether had concealed that its transactions would be linked to crypto when it first began operations.

Regulators Concern About Tether (USDT) Stablecoin

This is not the first time Tether will be under regulatory scrutiny, as regulators believe the USDT stablecoin could be a threat to global financial stability.

More so, one source disclosed that in recent months, federal prosecutors have notified some Tether execs that they are targets of the ongoing investigations.

In response to the development, Tether, which did not confirm the report, noted that it has continuously been in dialog with different law enforcement agencies, adding that it is part of its “commitment to cooperation and transparency.”

If the report is confirmed by the DoJ, it could be one of the biggest crackdowns by the U.S. government on cryptocurrencies, given the popularity of the stablecoin in the industry.

USDT has been widely paired against several cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH), across various trading platforms, with billions of dollars being exchanged since its inception.

Recall that Tether issued the USDT in 2014 to proffer solutions to the problems facing the market at the time, especially banks’ refusal to open accounts for cryptocurrency exchanges.

Traditional financial institutions feared that cryptocurrencies could be widely adopted by criminals to conduct various illicit transactions like money laundering and drug trafficking, among others, given the anonymous feature that most coins and tokens possess.

With Tether’s emergence, trading platforms got an alternative that enables their clients to exchange their crypto assets for the stablecoin and vice versa.

Despite Tether’s entrance into the market, the firm still needed a bank account that would hold the fiat equivalent of customers’ funds, which could be the crux of the matter. The DoJ could possibly want to unravel how Tether opened the bank account for its business, and scrutinize whether it concealed the fact that its transactions would be linked to cryptocurrencies.

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