The US government is closely examining the cryptocurrency company Tether. According to a report from the Wall Street Journal, they are investigating whether Tether violated sanctions and anti-money laundering laws.
The Manhattan U.S. attorney’s office is leading a criminal investigation. They want to know if Tether has been used by others for illegal activities, including funding drug deals, terrorism, and cybercrime.
They also want to see if Tether has been used to launder money from these illegal actions.
Tether is an important tool in areas facing sanctions. The government is now examining it closely. The Treasury Department is thinking about stopping Americans from using Tether because it has been used by groups under sanctions, like Hamas and Russian arms dealers.
The Justice Department investigated Tether a while ago. They investigated whether some of its supporters committed bank fraud. The supporters may have used fake documents to access the global banking system.
Tether says the allegations of criminal involvement are outrageous. Tether says it works with authorities globally. Tether freezes wallets and uses partners to track transactions. Tether says blockchain transparency helps stop crime and aids authorities in tracking transfers.
Tether faces regulatory problems as the cryptocurrency industry faces increased scrutiny. The Binance CEO was recently sentenced to four months in prison and fined $4.3 billion for money laundering violations.
Tether paid $61 million to settle a case with New York regulators.
The case was about how Tether represented its assets. Potential criminal charges could impact Cantor Fitzgerald, which manages most of Tether’s $80 billion in reserves. Cantor Fitzgerald is led by CEO Howard Lutnick, a Trump ally.
The Trump campaign did not comment on the federal investigation, but it praised Lutnick. It called him a “renowned business leader and philanthropist ” and said he was a volunteer co-chair of the Trump-Vance Transition team.