A probe into the actions of Tether executives over the past year has begun to query whether there are sufficient grounds for banking fraud charges to be brought forward.
In an investigation with potentially massive consequences for the crypto industry, the United States Department of Justice (DoJ) has begun unpacking the past actions of key Tether executive figures to see whether they knowingly concealed the crypto-linked nature of numerous transactions from banks.
“Tether routinely has open dialogue with law enforcement agencies, including the DOJ, as part of our commitment to cooperation and transparency,” Tether said in a statement relating to the accusations.
The DoJ investigations have plagued USTD ever since. However, this latest news suggests the attention of prosecutors has shifted from market manipulation to fraudulent banking practices – a significant pivot from the USDT asset to Tether as a company.
Earlier this year, Bitfinex and a syndicate of Tether affiliates settled a series of claims that the firms lied about the underpinning of USDT with fiat USD, after it emerged the companies didn’t even have access to traditional banking in 2017.
NY Attorney General Letitia James ordered a monetary settlement of $18.5m, to which the firms agreed.
“Tether’s claims that its virtual currency was fully backed by US dollars at all times was a lie.
“These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.”
USDT and stablecoins across the board are seen as a substantial threat by global regulators, these claims of underpinning with fiat juxtaposed with their sheer market cap drive fears that a run on the stablecoin could lead to a run on the underlying fiat currency.
This could lead to a complete destabilisation of credit markets.
Treasury Secretary Janet Yellen has warned that global regulators must “act quickly” in considering new rules and regulations to offset the risks posed by stablecoins – Central Bank Digital Currencies offer a potential solution.
More crypto news and information
As with any investment, it pays to do some homework before you part with your money. The prices of cryptocurrencies are volatile and go up and down quickly. This page is not recommending a particular currency or whether you should invest or not.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.