Tether rebuffs claims of U.S. probe into money laundering

Popular stablecoin issuer Tether has denied allegations that it is being investigated by the U.S. government over sanctions violations

Stablecoin issuer Tether has denied being investigated by the U.S. government over sanctions violations and a failure to comply with anti-money laundering laws, following a report by the Wall Street Journal.

The news outlet alleged last week that Tether was being investigated by the Treasury Department and New York’s U.S. attorney’s office over potential illegal funding of terrorism, hacking, and drug trafficking, as well as the potential misuse of Tether by Hamas or Russian weapons suppliers.

“These stories are based on pure rank speculation despite Tether confirming that it has no knowledge of any such investigations into the company,” Tether said in a statement. “The article also carelessly glosses over Tether’s well-documented and extensive dealings with law enforcement to crack down on bad actors seeking to misuse tether and other cryptocurrencies.”

Tether CEO Paolo Ardoino said that it had already notified the Wall Street Journal that the company was not under investigation. “WSJ is regurgitating old noise. Full stop,” Ardoino explained in a social media post.

The firm has said in the past that the public nature of blockchain transactions makes the possibility of criminal misuse increasingly unlikely.

Still, the stablecoin Tether remains the most popular crypto in the world, and the cryptocurrency maintains a total market capitalization of $120 billion. Its role as a settlement currency between other cryptocurrencies makes it integral to crypto’s future, and also invites concerns over how Tether is backed.

While stablecoins are traditionally pegged to stable assets like the U.S. dollar or gold, rumors have long swirled that Tether’s lack of transparency around its reserves might reflect a backing of less than 100%.

In 2021, regulators in New York State and at the Commodity Futures Trading Commission accused Tether of just this, leading the company to pay a $41 million fine to the CFTC and a separate $18.5 million fine to New York state.

Over the weekend at a PlanB event in Lugano, Switzerland, Ardoino attempted to mollify anxiety about Tether’s reserves once more, claiming that the stablecoins were “100% backed by real assets.” The CEO outlined how the company had $100 billion in U.S. treasuries – making it among the globe’s largest investors in securities from the U.S. government – and also held approximately $5.5 billion in bitcoin (equivalent to approximately 82,000 bitcoin) and 48 tons of gold.