- The judiciary probes Tether’s possible use in illegal activities, which creates rising concerns over stablecoin reliability.
- Tether’s USDT briefly loses its dollar peg amid DOJ inspection, impacting crypto market prices and leading to a substantial selloff.
- The token’s legislative obstacles raise concerns about the future role and stability of stablecoins in the digital asset sector.Â
The U.S. Department of Justice has reportedly opened an examination into Tether, the issuer of the USDT stabilized token, for possible misapplications of anti-money laundering and penalties laws. The Manhattan U.S. Attorney’s Office is examining if Tether’s USDT has been used by third parties for non-authoritized activities like drug trafficking, cybercrime, or terrorism financing. This development has sparked fears in the exchanges, leading to the token, which is briefly losing its dollar peg and causing a selloff across the business community.
DOJ Questions Possible Misuse of Tether’s USDT
The DOJ look into the coin is focused on whether USDT has been used to conduct transactions with sanctioned individuals or organizations. The DOJ may take action if Tether has allowed these transactions, which could lead to penalties or restrictions. Moreover, the Treasury Department is reportedly looking into sanctions that may affect U.S. users of USDT if compliance issues arise.
Tether’s CEO, Paolo Ardoino, addressed these allegations on X (formerly Twitter), saying the company has not been informed of an investigation. He referred to the report as “old noise,” while Tether’s spokesperson stated that the company works closely with authorities to prevent misuse on its platform.
Market Reaction to DOJ Probe
News of a potential DOJ investigation led to a dip in USDT’s value to about 99.81 cents, which affected the crypto market. Bitcoin, the largest cryptocurrency, dropped by around 3.3% to $65,878, and other major tokens like Solana and Dogecoin fell by 5.5% and 5.6%, respectively.Â
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Market analysts suggested this selloff likely resulted from news of Tether’s reported probe. Analyst Will Tamplin from Fairlead Strategies noted that the economic decline coincided with the DOJ report.Â
Regulatory Scrutiny Raises Questions for the token
Tether has faced regular scrutiny about its financial practices and transparency. Many critics have questioned whether Tether has fully backed reserves to support USDT. Despite its large market cap, Tether’s critics remain concerned about its compliance with regulations.
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