Proactive Investors - Stablecoin giant Tether did not mince words when responding to a bombshell Wall Street Journal article revealing a supposed US government investigation into the cryptocurrency firm.
According to a WSJ report citing “people familiar with the matter”, Tether is facing a criminal investigation into possible violations of sanctions and anti-money-laundering rules.
Federal prosecutors are reportedly weighing up sanctions against Tether due to its widespread usage by known terrorist organsations that use the stablecoin to shift money around.
Mexican drug cartels, Russian arms companies and Chinese fentanyl manufacturers are all said to be using Tether, which is a cryptocurrency pegged to the value of the US dollar.
Tether rebuffed the claims that an investigation is ongoing.
“It is wildly irresponsible for WSJ to write articles with reckless allegations with such certainty when no authorities have gone on the record to confirm these rumors, and no sources are named,” said Tether in a strongly worded blog post.
“These stories are based on pure rank speculation despite Tether confirming that it has no knowledge of any such investigations into the company.
“The article also carelessly glosses over Tether’s well-documented and extensive dealings with law enforcement to crack down on bad actors seeking to misuse tether and other cryptocurrencies.”
But it wouldn’t be the first time Tether has been targeted by US authorities.
The company fell into legal and regulatory hot water in 2021 after the New York Attorney General ruled that Tether misled the public over its collateralised position.
Rather than cash, Tether stablecoins were almost entirely collateralised by commercial paper (i.e. unsecured debt).
Since then, Tether has sought to increase its transparency with regular attestation reports.
Tether reported a record $5.2 billion in profit in the first half of 2024, primarily derived from income generated from US Treasury notes.
In fact, at $97.6 billion, Tether’s ownership of US notes was larger than Germany’s at the end of the second quarter.