Tether Faces DOJ Probe Amid Claims of AML Violations and Potential Treasury Sanctions

• DOJ’s investigation into Tether focuses on AML violations and potential USDT use in illegal activities.
• Treasury may impose sanctions on Tether, potentially limiting USDT transactions within the U.S.
• Tether CEO denies DOJ investigation claims, calling WSJ’s report speculative and lacking credible sources.

The U.S. Department of Justice (DOJ) has reportedly launched a criminal investigation into Tether, the issuer of the largest stablecoin, USDT, over possible anti-money laundering (AML) violations. 

The investigation, allegedly led by the U.S. Attorney’s Office in Manhattan, is focused on determining whether Tether and third parties utilized USDT for illegal activities such as drug trafficking, terrorism, hacking, and money laundering. 

According to the Wall Street Journal (WSJ), this investigation also involves the U.S. Treasury Department, which may impose penalties against Tether for any violations of U.S. sanctions. Such sanctions could impact U.S.-based transactions using USDT.

U.S. Treasury Sanctions Under Consideration

In addition to the DOJ’s investigation, the U.S. Treasury Department may consider sanctions or penalties if Tether is found to have breached sanctions policies. Treasury’s involvement could lead to prohibitions on U.S. individuals transacting with USDT, as it is widely used across the crypto market. 

Treasury is reportedly examining Tether’s dealings with individuals and organizations on the U.S. sanctions list, with potential consequences for the stablecoin issuer. Given that USDT is the most widely traded stablecoin, regulatory actions on Tether could carry significant implications across the crypto market, impacting not only Tether but the stability of USDT-dependent transactions.

Tether Denies Investigation Claims

In response to the WSJ report, Tether’s CEO Paolo Ardoino responded on social media, denying that the company is under any investigation by the DOJ. Ardoino emphasized that Tether actively collaborates with law enforcement agencies to prevent malicious use of its digital assets. 

Ardoino dismissed the WSJ report as unfounded, reiterating that the company would be aware if it were subject to any formal probe. Tether issued an official statement rejecting WSJ’s claims, calling the report “irresponsible” and based on “rank speculation” without confirmation from any authorities.

Political Motivations Alleged by Nic Carter

Crypto analyst Nic Carter of Castle Island Ventures added another dimension, suggesting the probe might be politically driven. In his social media post, Carter pointed to Howard Lutnick, CEO of Cantor Fitzgerald, a substantial manager of Tether’s reserves and a notable Trump supporter. 

Carter implied that Tether’s political connections might have influenced the DOJ’s reported actions. He claimed the DOJ intentionally leaked the investigation to the WSJ, allegedly to harm both Tether and Trump-affiliated entities in the crypto sector.