Breaking: US DOJ set to investigate Tether executives over Bank Fraud
Tether, the stable coin issuer might be in trouble again as the US Department of Justice (DOJ) has initiated a probe to investigate whether the executives of the company were involved in bank fraud. DOJ reportedly sent out letters to Tether executives informing them that they are targets of the investigation. A decision on whether to file a case or not will be made soon.
*TETHER EXECUTIVES SAID TO FACE CRIMINAL PROBE INTO BANK FRAUD
— *Walter Bloomberg (@DeItaone) July 26, 2021
The investigation by the agency is verifying whether Tether executives mislead banks. The DOJ is specifically looking into whether Tether concealed some of its transactions linked to cryptocurrencies. The criminal proceedings could potentially have big implications for Tether and in turn for the whole crypto market.
The investigation dates back to the early stage of Tether when banks in the US were not very keen on partnering with crypto companies or process crypto-related transactions.
Tether said it will fully comply with the investigation and they are fully committed to transparency.
“Tether routinely has an open dialogue with law enforcement agencies, including the DOJ, as part of our commitment to cooperation and transparency,”
Tether’s run-in with the law enforcement agencies has continued since 2018 when New York Attorney General (NYAG) filed a civil lawsuit against the firm and its associates including Bitfinex. NYAG accused Tether of helping Bitfinex in hiding its losses. The case was finally settled in February this year with Tether paying $18.5 million in fines.
Tether’s Market Dominance Under Threat?
Tether-issued USDT has the largest market share of the stablecoin market, but continuous run-ins with the enforcement agencies have dented its dominance. At a time when its rival USDC is seeing an increased rate of adoption, Tether’s fresh legal trouble could put USDT’s dominance under threat.
Circle has also pledged to work towards making USDC reserve records more transparent, while Tether’s Reserve audits have always been a controversial topic.
The timing of the investigation couldn’t have been worse for Tether, given the US government has called for tight regulations around stablecoin issuance. Treasury Secretary Janet Yellen has called upon regulators to act quickly on regulating the Stabelcoin market.
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