Cryptocurrency company Tether is currently under a federal investigation for possible sanctions and anti-money laundering (AML) violations, according to the Wall Street Journal.
The criminal investigation, led by prosecutors from the U.S. Attorney’s Office in Manhattan, is investigating whether Tether’s stablecoin USDT was used by third parties to finance illegal activities, including drug trafficking, terrorism and hacking, or to launder proceeds from such activities.
Alleged links to terrorism and arms trafficking
According to the reportThe U.S. Treasury Department is also considering imposing sanctions on Tether due to the cryptocurrency’s widespread use among individuals and groups already sanctioned by the U.S. government.
These include alleged ties to terrorist organizations such as Hamas and Russian arms dealers, which have led to increased scrutiny of the stablecoin issuer by authorities around the world.
The report notes that if sanctions were imposed, Tether would be barred from doing business with US companies, which would have a significant impact on its business.
Tether responds to research claims
The Justice Department’s investigation into Tether is not new; It started several years ago and initially focused on allegations that some of Tether’s lenders may have committed bank fraud by allegedly using forged documentation to gain access to the global banking system.
In response to the investigation, Tether said it has no indication it will face a broader investigation, labeling the allegations of aiding criminal actors or circumventing sanctions as “outrageous.”
In previous statements, the company has repeatedly stated that it actively cooperates with U.S. and international law enforcement agencies to combat illegal activities, a commitment the company says is evidenced by its operations.
For example, the company works with analytics firms such as Chainalysis and TRM Labs to improve transaction monitoring, and has successfully frozen wallets identified as belonging to criminals in various criminal organizations in collaboration with governments around the world.
In response to the report, the company’s CEO Paolo Ardoino took to social media site X (formerly Twitter) and said:
As we told WSJ, there is no indication that Tether is under investigation. WSJ regurgitates old sound. Point.
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