Tether image: YouTube
Executives at Tether, the world’s third largest stablecoin, face scrutiny by the U.S. Department of Justice for possible bank fraud during the early stages of their cryptocurrency business, Bloomberg News reported.
The report said that regulators are closing in on Tether executives after a year-long federal investigation examining whether Tether concealed from banks that its transactions were linked to crypto.
The U.S. and other countries including China have stepped up efforts in recent months to regulate digital assets amid their booming popularity as investible options in 2020.
In a statement to TheStreet, Tether refuted the Bloomberg report, saying that the “article follows a pattern of repackaging stale claims as ‘news.’ The continued efforts to discredit Tether will not change our determination to remain leaders in the community.”
Tether claimed to bring industry-leading technology and transparency “that has led to our growth. It is business as usual at Tether, and we remain focused on how to best serve the needs of our customers.”
In 2018, Bloomberg reported on a federal investigation into Tether’s activities.
In February, Tether and its owner, Bitfinex, reached a settlement with the New York Attorney General that included paying $18.5 million in penalties. Tether neither admitted nor denied accusations from the AG that the companies “made false statements about the backing of the ‘tether’ stablecoin, and about the movement of hundreds of millions of dollars between the two companies to cover up the truth about massive losses by Bitfinex.”
Launched in 2014, Tether is tied to the U.S. dollar to maintain a consistent value and still needs banks to store and transfer value, which some were reluctant to do.
The stablecoin universe is dominated by two main tokens, Tether and USD Coin. Tether represents more than 60 percent of the total stablecoins currently issued, worth about $100 billion.
Unlike bitcoin or other cryptocurrencies, a stablecoin ties its value to another asset such as actual money or other holdings. This helps the coin to avoid rapid swings in the market and makes its movements easier to predict by traders, bringing liquidity to the crypto exchange.
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