The U.S. Department of Justice (DOJ) is investigating whether or not Tether's executives have committed bank fraud, per Bloomberg.
Federal prosecutors are focusing on Tether's early days, where it is alleged that Tether potentially concealed from banks transactions that were linked to crypto.
Three individuals close to the matter have reportedly requested to remain anonymous. Decrypt has contacted Tether and will update this article should we receive a response.
What is Tether?
Tether is a stablecoin—the type of cryptocurrency that is pegged to a currency. Tether claims its stablecoin is backed by the U.S. dollar.
If the DOJ were to bring criminal charges to Tether, it would likely mean one of the largest steps in the crackdown of the crypto industry given how important Tether is to the wider ecosystem. In theory, whenever a user deposits a U.S. dollar into Tether's account, Tether—the company—mints one Tether—the stablecoin—in return.
While most of the cryptocurrency industry is prone to wild and unpredictable price swings—turning away investors weary of the inherent risks—Tether's U.S. dollar peg allows the stablecoin to be used to buy and sell other cryptocurrencies. Right now, there is over $60 billion worth of Tethers in circulation.
Tether to Release Long-Awaited Audits Within Months, Says General Counsel
Controversial stablecoin Tether will release its audits very soon, those behind the cryptocurrency said today. Tether, the third biggest digital asset by market cap, has said it will release its audits for years—though it is yet to do so. But today, Stu Hoegner, Tether’s general counsel, said in an interview with CNBC that an audit “is in the process” and will arrive in “months not years.” Tether is a stablecoin that is pegged 1:1 with the U.S. dollar. This makes the coin’s value stable, as...
Tether's critics
This news comes roughly two months after Tether received intense criticism over the breakdown of its reserves.
Despite previous claims that Tether was backed 100% by cash, figures showed that less than 3% of Tether's reserves were held in cash.
In light of the news surrounding the DOJ's investigation, Tether released a statement saying the company "routinely has open dialogue with law enforcement agencies, including the DOJ, as part of our commitment to cooperation and transparency."
When Tether released its breakdown of reserves in May this year, it was the first time these figures had been released since 2014.
