The Wall Street Journal (WSJ) reported on Friday that the U.S. federal government is investigating Tether, the issuer of the world’s largest stablecoin, USDT, for potential violations of anti-money laundering (AML) laws and sanctions.
Following the news, Bitcoin’s price dropped significantly. However, Tether CEO Paolo Ardoino has denied the allegations, stating that there is no ongoing investigation.
The Manhattan U.S. Attorney’s Office is reportedly looking into whether USDT is being used for illegal activities. Despite these concerns, Tether has maintained its peg and fulfilled redemption requests.
While some have questioned the transparency of Tether’s $100 billion reserves, Cantor Fitzgerald CEO Howard Lutnick has claimed that his company manages the U.S. Treasury bills backing the tokens.
Tether has faced criticism from companies like Coinbase and Circle, who have accused the stablecoin of facilitating terrorist financing.