Topline
A years-long federal investigation is closing in on potential criminal charges for executives at Tether, one of the world’s most valuable cryptocurrencies and a cornerstone of today’s digital currency ecosystem, Bloomberg reports, as U.S. regulators step up efforts to regulate the assets.
Tether is the third largest cryptocurrency by market value.
Key Facts
The Department of Justice is investigating whether executives at Tether committed bank fraud, Bloomberg reported Monday, citing three people familiar with the matter.
The DoJ is exploring whether Tether hid from banks the fact its transactions were linked to cryptocurrency, Bloomberg reported.
Tether, which was launched in 2014, is tied to the U.S. dollar to maintain a consistent value and still needs banks to store and transfer value, which some were reluctant to do.
The investigation is the latest step in the DoJ’s years-long probe into Tether as American regulators ramp up pressure on stablecoins, i.e. cryptocurrencies pegged to another asset.
Tether told Bloomberg it “routinely has open dialogue with law enforcement agencies” as part of its commitment to ”cooperation and transparency.”
What To Watch For
Tether is now the world’s third-biggest cryptocurrency by market value and a key component of the crypto ecosystem (it is commonly used to trade bitcoin). Criminal charges, should they emerge, could have a significant impact on the entire market.
Big Number
$62 billion. That’s the market value of Tether, the highest-valued crypto behind ethereum and bitcoin.
Key Background
Stablecoins are supposed to temper the wild volatility common in crypto markets. While they have grown rapidly over the past year—U.S. dollar-backed tokens surpassed $100 billion in May—they are largely unregulated and many lack transparency, sending regulators scrambling to “act quickly” and develop rules. Tether, along with exchange Bitfinex, paid an $18.5m penalty in February after New York’s attorney general accused them of hiding “massive” financial losses.
Further Reading
After An $850 Million Controversy, What Everyone Should Know About Bitfinex, Tether And Stablecoins (Forbes)
Tether Executives Said to Face Criminal Probe Into Bank Fraud (Bloomberg)
Tether: the former plastic surgeon behind the crypto reserve currency (Financial Times)
