A probe by US authorities into Tether and its sister crypto exchange Bitfinex has been reassigned to figure out whether executives behind the world’s largest dollar-pegged stablecoin committed bank fraud.
Per a Bloomberg report, the case has been transferred within the department and a potential criminal case would have broad implications for the cryptocurrency market.
US Attorney Damian Williams in Manhattan, whose office has been one of the most aggressive in pursuing suspected cryptocurrency crimes, took over the inquiry in recent weeks, according to people familiar with the matter.
According to sources cited by Bloomberg, the probe is focusing on events during the nascent stages of Tether, examining whether USDT operatives concealed from banks that transactions were linked to crypto.
Bloomberg reported in 2021 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: ”Bloomberg has proven themselves time and time again to be desperate for attention in an industry that they just do not understand. This most recent attempt to tarnish the reputation of Tether, one of the industry’s most significant contributors is yet another example of this behavior. This is Bloomberg recycling old news that isn’t even factual.”
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, Wells 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.
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.
Furthermore, Tether said it enhanced its cooperation with the DOJ by helping the department in real time in connection with some of the biggest cybercrime and national security cases in the country.
“In fact, Tether executives have had no interactions with the DOJ in connection with any investigation for well over a year and the DOJ does not appear to be actively investigating Tether. Tether and Bitfinex have actually been identified as victims in the Fowler case that Bloomberg references,” the statement concludes.
