US Department of Justice is reportedly investigating Tether
According to one Wall Street Journal report (WSJ) the US government is reportedly investigating Tether for possible violations of sanctions and money laundering laws. The criminal investigation also involves the question of whether third parties used USDT to finance illegal activities such as drug trafficking, terrorism, hacker attacks and money laundering.
Meanwhile, the WSJ reported that the US Treasury Department is also considering possible sanctions and penalties against the stablecoin issuer for doing business with individuals and groups on the US sanctions list. Such sanctions from the US Treasury Department could potentially prohibit US citizens from conducting transactions with USDT.
Paolo Ardoino, CEO of Tether, commented on the WSJ report in an X-posting and saidThe Wall Street Journal was told that there were no signs the crypto company was under investigation.
He added:
The WSJ regurgitates old rumors. Stop.
However, the Tether fiasco is undoubtedly worrying considering the impact it could have not only on the stablecoin issuer but also on the broader crypto market. USDT is the largest stablecoin by market cap and is widely used in the crypto market, so this could create a domino effect in the market.
Furthermore, such a development could trigger a panic in the crypto market, similar to the situation when the US government charged leading crypto exchange Binance and its former CEO Changpeng “CZ” Zhao with violating money laundering laws.
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The Tether fiasco in numbers
Bitcoin and altcoins experienced massive volatility on Friday night after a controversial Wall Street Journal report that led to the Tether fiasco and was immediately denied by Tether’s CEO.
Later he addedthat the stablecoin issuer, which has now expanded its presence to many other industries, including BTC mininghas expanded to work regularly and directly with law enforcement agencies to prevent rogue states, terrorists and criminals from misusing USDT.
Still, the damage has been done to over-leveraged traders as liquidations have surged to over $400 million per day.
Crypto market crashes: BTC falls and liquidations rise
Such news usually has an immediate impact on prices in the cryptocurrency market, and this time was no exception. BTC was close to $69,000 but immediately fell by more than $3,000 to $65,500. It recovered somewhat and is now trading at almost $67,000.
As most altcoins followed suit, total liquidations skyrocketed to $405 million per day. Interestingly, altcoins accounted for the lion’s share with over $100 million, followed by BTC and ETH with $68 and $65 million, respectively.
Loud CoinGlass Nearly 150,000 over-leveraged traders have been ruined in the last few days.