US Justice Department goes after Tether execs for possible bank fraud

abdelaziz Fathi

The Justice Department is reportedly investigating whether executives behind the stablecoin Tether, which is closely affiliated with popular exchange Bitfinex, concealed transactions linked to crypto from banks during its early days.

According to a Bloomberg report, Tether Ltd. has been embroiled in a new criminal probe that accuses its operators of committing serious bank fraud. Prosecutors have been building a case to sue the stablecoin issuers and a decision on the probe could be made soon.

The DOJ’s investigation is focused on whether the company behind the third largest cryptocurrency by market cap misled banks by hiding the fact that transactions were linked to cryptocurrency.

Citing three people with knowledge of the matter, Bloomberg reported that federal prosecutors have sent letters to unnamed executives at Tether alerting them that they are the targets of the investigation. The sources, who asked not to be named because the probe is confidential, added that US authorities have been actively looking into the allegations since 2018.

Tether officials denied “the years-old allegations,” and said Bloomberg article follows a pattern of repackaging stale claims as “news,” patently designed to generate clicks.

The company added: “Tether routinely has open dialogue with law enforcement agencies, including the U.S. Department of Justice, as part of our commitment to cooperation, transparency, and accountability. We are proud of our role as industry leaders in promoting cooperation between industry and government authorities in the U.S. and around the world. We remain committed to our customers and the industry-leading technology and transparency that has led to our growth.”

Tether and its associated exchange Bitfinex have always had troubled banking relationships that eventually led to a series of undisclosed arrangements with third-party payment providers. In 2017, they filed a lawsuit against Well Fargo after the US bank blocked US dollar wire transfers originating from the platform’s account with four different Taiwanese banks. The Asian lenders had been using Wells Fargo as the correspondent bank for US dollar wire transfers for over a period of two years without any glitch.

At the time, Well Fargo seemingly stopped processing the funds due to Bitfinex and Tether’s nature of business involving cryptocurrencies. However, the stablecoin issuers argued that the US-based banking institution was aware of their business model through the KYC process shared by the platform’s Taiwanese partners.

The market capitalization of Tether’s USDT has recently surpassed $62 billion, further helping it cement its position as the world’s largest stablecoin. The coin has been rising rapidly in popularity over the last year amid growing institutional and corporate demand.

Since the SEC hit Ripple with the charges of selling unregistered securities, the cryptocurrency community has been wondering which asset could face the same fire?

While a number of cryptocurrencies and similar assets were under speculation, Tether CTO, Paolo Ardoino dismissed these concerns and said there is no evidence that US regulators are coming after them, too.

Ardoino said in December 2020 that Tether is indeed regulated and also registered with the FinCEN. While pointing out to its record market capitalization, he bashes those who echo “the deliberate lies,” accusing them of spreading FUD.

Read this next

Digital Assets

Big Time Generates over $100M in Revenue since Preseason

Innovative game developer Big Time Studios announces that its highly anticipated free-to-play multiplayer action/MMO RPG Big Time, has generated $100M in revenue. According to the team, players transacted a total volume of over $230M, without selling a single token.

Digital Assets

Centralized exchanges are 10 times more popular than DEXs in Western Europe

Western European traders are found to prefer centralized exchanges over decentralized ones as CEX traffic outpaces DEXs by a factor of ten.

Market News

Stock Market Analysis: Is NVDA Losing Its Leadership?

Since the beginning of the week, the S&P 500 Index (US500) has seen a modest increase of about 0.58%, whereas NVDA’s share price has experienced a decline of approximately 3.8%. This recent divergence raises concerns among Nvidia stock investors — could it signify a loss of NVDA’s market leadership?

Industry News

ESG: Australian regulator wins first greenwashing court case against Vanguard

Vanguard admitted that a notable portion of the securities within both the Index and the Fund did not undergo the promised ESG scrutiny.

Fintech, Uncategorized

BitMEX integrates HALO from Solidus Labs for cross-market surveillance

“The recent approval of the Spot Bitcoin ETF has piqued the market’s interest. As a result of price volatility, the trading volumes for crypto derivatives have gone up substantially. HALO, with its advanced technology and crypto-native detection architecture, will enable BitMEX to smoothly and safely scale trade surveillance across its increased trading volumes and provide the necessary safeguards for new product launches.”

Reviews

IUX Broker Review

IUX, recently rebranded from IUX Markets, stands as a multi-asset Forex broker recognized for its regulatory compliance across various jurisdictions.

Industry News

Horizon Software rebrands to Horizon Trading Solutions

“Horizon Trading Solutions has seen accelerated global growth over the past year to meet the rising demand for our trading solutions and built-for-purpose technology offering. The choice to rebrand represents a key part of this development, while maintaining our heritage and history in the industry.”

Market News

USDJPY has surged to levels last witnessed in 2022. Should we consider opening a short position?

The recent resurgence of the US dollar has propelled USD/JPY to new heights, touching levels not seen since 2022. This surge comes against the backdrop of stable short-term yields and ongoing economic data that fails to signal a significant slowdown, prompting questions about the extent of current monetary easing measures.

Digital Assets

DED Trends on Twitter After Memecoin Snapshot Announcement

Polkadot-backed community coin #DED, made it to the trending charts on X, demonstrating community’s engagement and interest behind the memecoin. 

<