US Opens Investigation into Tether – The World’s Largest Stablecoin.
Tether, the company behind the well-known stablecoin USDT, is currently facing a criminal investigation by the U.S. Department of Justice over potential anti-money laundering violations.
According to a report by the Wall Street Journal on October 25, the investigation is led by prosecutors from the U.S. Attorney’s Office in Manhattan. Authorities are examining whether the USDT stablecoin has been used by organizations or individuals to fund illegal activities, including drug trafficking, terrorism, cybercrime, and money laundering.
In fact, the investigation into Tether dates back several years and initially focused on whether certain Tether backers might have used falsified documents to access the global banking system. Sources also indicate that the U.S. Treasury Department is considering sanctions against Tether, as this stablecoin is widely used by individuals and groups on the U.S. blacklist. If sanctions are imposed, U.S. citizens may be prohibited from conducting transactions with the company.
On October 26, Tether CEO Paolo Ardoino responded on social media platform X, stating that there are “no signs” of an investigation directly involving the company, but he declined further comment. Both the U.S. Department of Justice and the Treasury Department have also refrained from providing an official response.
News of the potential investigation into Tether caused immediate turmoil in the cryptocurrency market. Bitcoin’s price dropped sharply from $68,800 to $65,000 before recovering slightly to around $66,000, with red dominating the market overall.
USDT is currently one of the top stablecoins, playing a key role in stabilizing value and facilitating transactions within the cryptocurrency ecosystem. Unlike some other stablecoins, Tether claims that USDT is backed by real assets, helping maintain its 1:1 peg to the U.S. dollar and aiming to avoid collapses like the previous downfall of Terraform Labs’ UST, which was only backed by another token, Luna.
With Tether holding reserves of over $120 billion in traditional financial institutions, many experts warn that any disruption to Tether could have significant impacts across the broader financial system. “The risk surrounding Tether is substantial,” said Rajeev Bamra, head of digital asset and DeFi strategy at Moody’s Investor Service, highlighting Tether’s dominant position in the cryptocurrency space earlier this year.
