US Department Of Justice Aims At Tether Executives For Bank Fraud

The law enforcement authority in the United State, the Department of Justice, is reportedly considering charges against executives at iFinex Inc., the company behind the stablecoin Tether, for alleged bank frauds. The latest crackdown on Tether is a continuation of the lawsuit saga between regulators and the largest stablecoin project to date.

The third-largest cryptocurrency by market capitalization is commonly used as a gateway for entering the crypto space and trading other cryptocurrencies. However, as a stablecoin pegged to the U.S. dollar, it has to have the corresponding amount of US dollars. But, as revealed in March, only 3.87% of USDT is backed by dollars. The rest of the Tether supply is backed by a combination of cash equivalents, short-term deposits, and commercial paper.

However, the Department of Justice is not digging around Tether’s fiat backings – it has aimed its crosshairs at iFinex executives – whether or not they committed a bank fraud years ago.

The federal prosecutors have reportedly opened a probe into Tether, investigating whether the company’s execs concealed the nature of their activities with banks. The possible illicit activity was conducted in the early days of Tether’s life and it seems to have nothing in common with allegations of Tether illegally manipulating the crypto market in order to push Bitcoin’s price up.

Shortly after the report, Tether responded that the ongoing efforts to discredit Tether will not change the company’s determination to be at the forefront of the crypto sector.

„Tether routinely has an open dialogue with law enforcement agencies, including the U.S. Department of Justice, as part of our commitment to cooperation, transparency, and accountability. We are proud of our role as industry leaders in promoting cooperation between industry and government authorities in the U.S. and around the world. We remain committed to our customers and the industry-leading technology and transparency that has led to our growth“, the stablecoin leader posted.

Tether has always been a perfect match for government accusations, as in 2018, for instance, the DOJ launched an investigation into whether Tether was manipulating crypto prices. Later in 2018, New York Attorney General Letitia James accused Tether and Bitfinex of allegedly going into the USDT reserves and covering a loss of $850 million that had been compromised by Panama-based payment processor Crypto Capital Corp.

Following the case, The two exchanges settled with NYAG for almost $19 million in February 2021. Also, Tether and Bitfinex agreed to publish quarterly reports describing Tether’s reserves composition mix for the next two years.

Meanwhile, the allegations didn’t stop Bitcoin bulls from pushing Bitcoin up after the 9% wipeout in the late hours of July 26. The downwards push came as Amazon denied the rumors of its plans to accept Bitcoin as a means of payment from 2022. The dip, however, found great support around $36,800, which managed to secure a current price point of $37,095.40 per BTC.