Cryptocurrency company Tether is currently under federal investigation for potential sanctions and anti-money laundering (AML) violations, according to the Wall Street Journal.
The criminal investigation, led by prosecutors from the US Attorney’s Office in Manhattan, is examining whether Tether’s USDT stablecoin was used by third parties to fund illicit activities, including drug trafficking, terrorism, and piracy, or to launder the proceeds from such activities.
Alleged links to terrorism and arms trafficking
per a reportThe US Treasury Department is also considering imposing sanctions on Tether due to the widespread use of its cryptocurrency among individuals and groups that the US government has already sanctioned.
These include alleged links to terrorist organizations such as Hamas and Russian arms dealers, which has led to increased scrutiny of the stablecoin’s provenance by authorities around the world.
The report notes that if sanctions are imposed, Tether will be banned from doing business with US companies, which would have a significant impact on its operations.
Tether responds to investigative claims
The Justice Department’s investigation into Tether is not new; It began several years ago, initially focusing on allegations that some Tether backers may have committed bank fraud by using forged documents to gain access to the global banking system.
In response to the investigation, Tether stated that it had no indication it would face a broader investigation, and called allegations of aiding criminal actors or circumventing sanctions “outrageous.”
In previous statements, the company has repeatedly stated that it actively cooperates with US and international law enforcement agencies to combat illegal activities, a commitment that it believes is demonstrated through its operations.
For example, the company has partnered with analytics companies such as Chainalogy and TRM Labs to enhance transaction monitoring, and has successfully frozen wallets identified as being owned by criminals in various criminal organizations in cooperation with governments around the world.
Commenting on the report, the company’s CEO, Paolo Ardoino, took to the social networking site X (formerly Twitter) and He said:
As the Wall Street Journal told us, there is no indication that Tether is under investigation. The Wall Street Journal regurgitates old noise. Full stop.
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