Tether executives are reportedly under investigation for financial wrongdoing, according to Bloomberg. Prosecutors are investigating whether Tether hid its connection to cryptocurrency transactions from banks. The Tether coin has the highest number of tokens in circulation for stablecoins.
According to three individuals with direct knowledge of the issue who requested not to be identified because the inquiry is private, authorities are investigating whether Tether hid the fact that transactions were connected to crypto.
Tether’s DOJ Inquiry
As part of its probe, the DOJ is looking at behavior that occurred more than a few years ago, the DOJ’s report said.
Bloomberg reportedly has an inside source who informed them that the U.S. Attorney’s Office had sent subpoenas to the people under Tether’s jurisdiction. The letters also indicate that a decision may be made shortly on whether to take legal action. The decision on whether to bring charges ultimately rests with senior Justice Department officials.
This may be quite important in the US’s current assault on digital currency. Tether’s dollar-linked cryptocurrency has more than $62 billion in circulation, making it the biggest stablecoin on the market.
Investors utilize stablecoins to avoid exchanging fiat currency for cryptocurrency, a procedure that costs time and money. Tether supports 50% of all bitcoin transactions, according to Bloomberg.
This recent revelation follows almost two months after Tether’s reserves were broken.
While earlier statements said that Tether had 100 percent backing in U.S. dollars, data revealed that just a small percentage of Tether’s reserve funds were in U.S. dollars.
This is the first time since 2014 that the breakdown of Tether’s reserves has been made public.
Booming Interest in Stablecoin Usage
This inquiry into Tether’s actions comes as stablecoin usage has boomed.
The main rival to tether is Circle’s USDC. In contrast to USDT, USDC is argued to be issued by reputable financial institutions and is backed by the US dollar in segregated bank accounts. Additionally, it is said to undergo frequent and public audits to ensure its integrity.
It’s not just cryptocurrencies that stablecoins are being used; stablecoins are being applied in many other situations, and one notable application outside of the cryptocurrency sphere is to make international purchases.
Some websites currently take stable cryptocurrencies. From internet shopping to dating and gambling, the variables are many. Diem (previously known as Libra), Facebook’s stablecoin, will possibly be used in the same way as similar coins.