The cryptocurrency market experienced turbulence following The Wall Street Journal’s October 25 report claiming ongoing federal investigations into Tether, the world’s largest stablecoin issuer. According to the report, which cited unnamed sources, the US Attorney’s Office for the Southern District of New York is conducting a criminal investigation into third-party use of USDT for illicit activities, while the Treasury Department is separately considering sanctions over its alleged use by sanctioned entities, including Hamas and Russian arms dealers.
Tether’s response was swift and forceful, with CEO Paolo Ardoino dismissing the report as “old noise” and the company releasing a statement condemning the article as “wildly irresponsible.” The company emphasized its extensive cooperation with law enforcement, noting its assistance to over 145 agencies in recovering more than $108.8 million in USDT linked to illegal activities since 2014. However, Tether’s history with regulators includes a $42.5 million fine from the CFTC in October 2021 for violations of the Commodity Exchange Act, and industry figures like Ripple CEO Brad Garlinghouse have previously suggested federal scrutiny of the company.
The market impact was immediate, with Bitcoin dropping from $67,367 to $66,016, and other major cryptocurrencies experiencing similar declines. The report’s timing is particularly significant given Tether’s daily trading volume of approximately $190 billion and its crucial role in crypto market liquidity. While the authenticity of the investigations remains unconfirmed by official sources, the market’s sensitive reaction underscores the continued importance of regulatory clarity in the cryptocurrency sector, particularly concerning stablecoins.
