Unsubstantiated Tether Investigation Shakes Crypto Market Amidst Alleged U.S. Government Scrutiny

According to Cointelegraph: The crypto market faced a wave of uncertainty following an exclusive report by The Wall Street Journal on October 25, suggesting ongoing U.S. government investigations into Tether, the stablecoin issuer behind USDT. The report claimed that the U.S. Department of Justice and Treasury Department are scrutinizing Tether over potential illicit use of its stablecoin, including allegations of facilitation in illegal financing activities. In response, Tether CEO Paolo Ardoino dismissed the report as “old noise” aimed at spreading unfounded fears.Claims of a Criminal Investigation and Potential SanctionsAccording to the WSJ, the U.S. Attorney’s Office for the Southern District of New York has reportedly been investigating Tether for several years over alleged illicit uses of USDT. Simultaneously, the U.S. Treasury Department is said to be considering sanctions against Tether for its alleged association with sanctioned entities. Despite these claims, Tether categorically denied the allegations, calling the accusations “outrageous” and emphasizing its cooperation with over 145 law enforcement agencies in recovering $108.8 million in USDT linked to illicit activities.Crypto Market Reacts to NewsNews of the investigation impacted the broader crypto market, with Bitcoin dropping from $67,367 to $66,016 and Ethereum, BNB, Solana, and XRP following suit with declines. Tether’s CEO labeled the WSJ report as “regurgitating old noise” without substantiated evidence, aiming to quell market anxieties surrounding the stablecoin issuer.Background and Ongoing CriticismTether and Bitfinex faced previous regulatory action, including a $42.5 million fine by the Commodity Futures Trading Commission (CFTC) in 2021 for regulatory violations. In a May podcast, Ripple CEO Brad Garlinghouse also mentioned potential U.S. scrutiny on Tether, adding to an ongoing narrative of regulatory pressures.The crypto market remains wary as allegations surface again, awaiting further clarity on Tether’s regulatory future.