Tether Scrutinized by U.S. Authorities for Potential Breaches of Anti-Money-Laundering Laws and Sanctions: WSJ

U.S. authorities are scrutinizing Tether for potential breaches of anti-money-laundering laws and sanctions, according to sources cited by The Wall Street Journal (WSJ) in a report written by Angus Berwick, Vivian Salama, and Ben Foldy and published earlier today.

U.S. authorities are investigating whether third parties have used Tether’s stablecoin to finance illegal activities, The Wall Street Journal reported on Friday, citing sources familiar with the matter.

The Manhattan U.S. Attorney’s Office is leading the probe, the Journal said, adding that the Treasury Department is also considering sanctions against Tether because of its cryptocurrency’s popularity among groups and individuals under U.S. sanctions.

If imposed, the sanctions would bar Americans from doing business with Tether.

Tether’s stablecoin, USDT, which maintains a 1-to-1 peg with the U.S. dollar, has become a central concern for U.S. regulators and enforcement agencies, the Journal reported.

Unlike more volatile digital currencies, Tether’s value stability has made it an attractive substitute for the dollar in areas where U.S. currency is restricted.

With daily trading volumes reaching approximately $190 billion, Tether remains the world’s most traded cryptocurrency, playing a crucial role in several national security challenges, according to the Journal’s previous reporting.

The Justice Department’s inquiry into Tether has been ongoing for several years, initially focusing on allegations that some Tether backers may have falsified documents to gain access to the global banking system, the Journal reported.

Tether has stated that it has no indication of a broader investigation, dismissing accusations of involvement in criminal activities as unfounded.

“To suggest that Tether is somehow involved in aiding criminal actors or sidestepping sanctions is outrageous,” Tether said in a statement, according to the Journal.

“We work actively with U.S. and international law enforcement to combat illicit activity, as we’ve publicly demonstrated many times.”

Tether has also intensified its efforts to monitor the usage of its stablecoin. The company’s executives emphasize that the transparency of blockchain records, which track tether transactions, makes it unsuitable for illicit use and assists authorities in tracing funds.

Tether has recently bolstered its monitoring capabilities, collaborating with analytics firms Chainalysis and TRM Labs to enhance transaction oversight. The company also froze 1,850 wallets and recovered $114 million in assets last month.

In response to this story, Tether CEO Paolo Ardoino said on social media platform X that this was fake news:

As we told to WSJ there is no indication that Tether is under investigation. WSJ is regurgitating old noise. Full stop.

This news seems to have negatively affected the price of Bitcoin. As of 7:25 p.m. UTC on November 25, Bitcoin was trading at around $66,697, down 1.6% in the past 24-hour period.

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