Bitcoin

Tether Holdings Ltd., issuer of the popular USDT stablecoin, faces heightened scrutiny as U.S. regulators ramp up investigations that could disrupt the digital assets ecosystem. This intensified oversight comes on the heels of new inquiries from the U.S. Department of Justice and the Treasury Department, which reportedly are exploring possible ties between USDT and illicit activities, such as <a href="https://thecoinrise.com/tornado-cash-developer-sentenced-for-money-laundering/" rel="noopener noreferrer nofollow">money laundering and sanctions violations</a>.
The Wall Street Journal’s recent report underscores the regulatory push to address potential risks posed by Tether’s widespread adoption in the cryptocurrency world, where it facilitates billions in transactions daily as a digital dollar alternative.
The U.S. Treasury is also reportedly considering whether to add Tether to its sanctions list, a move that could severely hinder its operations. If USDT were added to the Specially Designated Nationals and Blocked Persons list, it would effectively restrict its use in U.S. markets and could impact its value peg. John Paul Koning, a noted financial analyst, <a href="https://www.bloomberg.com/news/articles/2024-10-25/crypto-s-too-big-to-fail-token-tether-faces-potential-new-threat-from-us-usdt" rel="noopener noreferrer nofollow">told</a> Bloomberg the consequences of such sanctions, especially on Tether’s key banking partner, Cantor Fitzgerald, which manages billions in assets for the company.
“Blocking Tether’s billions in T-bills could disrupt its redemption mechanisms and shake its peg stability,” Koning said, referencing USDT’s fundamental $1 value peg.
<h2 id="span-style-font-weight-400-tether-defends-its-position-span">Tether Defends Its Position</h2>
While Tether’s CEO, Paolo Ardoino, and other representatives have denied any ongoing U.S. investigations, claiming that recent media reports regurgitate “old news,” this is not the first time Tether has encountered regulatory probes. The stablecoin issuer previously faced skepticism over its reserves, with critics questioning whether the firm held sufficient assets to maintain its $1 peg.
Despite <a href="https://thecoinrise.com/tether-reserves-tops-118-billion-amid-renewed-commitment-to-compliance/" rel="noopener noreferrer nofollow">Tether’s reassurances, concerns over its reserve backing</a> intensified following a Bloomberg report, which stated that U.S. officials were examining over $20 billion in transactions linked to Moscow-based Garantex. The exchange, known for its ties to financial crimes, has heightened fears that Tether may be indirectly involved in facilitating unauthorized transactions.
<h2 id="span-style-font-weight-400-crypto-industry-braces-for-possible-ramifications-span">Crypto Industry Braces for Possible Ramifications</h2>
<a href="https://thecoinrise.com/tether-at-risk-of-delisting-on-coinbase-over-mica-compliance/" rel="noopener noreferrer nofollow">As Tether navigates these new challenges</a>, experts like Hilary Allen from American University argue that a collapse of Tether would have far-reaching effects across crypto markets, affecting both Bitcoin and Ethereum, two major assets frequently traded against USDT. This scrutiny highlights the increasing interconnectedness of the traditional financial sector with digital assets. Tether’s relationship with Cantor Fitzgerald reflects this growing overlap and raises questions about the role stablecoins play in broader financial systems.
For now, the crypto community remains divided on the outcome, with some dismissing the controversy as another instance of “Tether FUD.”
The post <a href="https://thecoinrise.com/mounting-scrutiny-on-tether-as-u-s-investigations-and-potential-sanctions-loom/" rel="noopener noreferrer nofollow">Mounting Scrutiny on Tether as U.S. Investigations and Potential Sanctions Loom</a> appeared first on <a href="https://thecoinrise.com/" rel="noopener noreferrer nofollow">TheCoinrise.com</a>.

Mounting Scrutiny on Tether as U.S. Investigations and Potential Sanctions Loom

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