Tether executives are facing the US Department of Justice probe on alleged bank fraud committed in Tether’s early days as we can see more in our latest Tether news.
The US Department of Justice is investigating whether or not the Tether executives committed bank fraud as the federal prosecutors are focusing on the early days of the platform where it is alleged that Tether concealed from banks transactions linked to crypto. Three individuals close to the matter wanted to remain anonymous. Tether is a stablecoin or a type of crypto that is pegged to a currency. Tether claims its stablecoin is backed by the US dollar. If the DOJ were to bring criminal charges to the company it would mean that one of the biggest steps in the crypto crackdown on Tether is about to happen, given how important it is in the wider ecosystem. In theory, whenever a user deposits a US dollar into the Tether account, the company mints one stablecoin in return.
While most of the crypto industry is prone to wild and unpredictable price movements, turning away investors of inherent risks, Tether’s US dollar peg allows for the stablecoin to be used to buy and sell other cryptos. There is over $60 billion worth of Tethers in circulation however the news came two months after the company received intense criticism over the breakdown of the reserves. Despite the previous claims that tether was backed 100% by cash, figures show that less than 3$ of the reserves were held in cash. In light of the news around DOJ’s investigation, Tether released a statement saying that the company has an open dialogue with the law enforcement agencies like the DOJ as a part of the commitment to cooperation and transparency. When Tether released its reserves breakdown in May, it was the first time that these figures were released in 2014.
As recently reported, USDT is the most popular stablecoin that is in the third position in global digital assets and it’s on blockchain that cybersecurity experts see an unhackable with the majority trusting its security. However, most people in the crypto community were waiting for a financial audit of the stablecoin but now it seems that the ongoing regulatory issues in the crypto space galvanized the Tether team into auction and as a result, they are declaring that an audit will happen soon.