U.S. Investigation into Tether Intensifies Amid Allegations of Sanctions Violations and Money Laundering Risks

U.S. authorities are stepping up investigations into Tether, the issuer of the world’s largest stablecoin, amid concerns over possible violations of anti-money laundering regulations and sanctions breaches, according to recent reports. The Wall Street Journal disclosed that officials are examining whether Tether’s cryptocurrency, USDT, has been exploited by third parties for illicit activities like terrorism, drug trafficking, and hacking.

The probe is being spearheaded by the Manhattan U.S. Attorney’s Office, with the Treasury Department reportedly considering sanctions against Tether. This action could limit or prevent U.S. residents and businesses from conducting transactions with Tether. Allegations include use by individuals and entities under U.S. sanctions, such as the Hamas group and Russian-based actors. Tether’s CEO Paolo Ardoino quickly responded to the report, calling it outdated speculation, asserting on social media that “there is no indication that Tether is under investigation.”

Tether’s regulatory challenges are longstanding. The Commodity Futures Trading Commission (CFTC) previously accused the company of making “untrue or misleading statements” regarding USDT’s backing by U.S. dollars. In response to ongoing scrutiny, Tether maintains that it cooperates with international law enforcement to combat illicit finance.