Everyone knows Tether. And how could you not? It is the largest stable coin on the market. Tether, however, has made headlines more than once and not in a good way. And it appears to be happening again as Tether is now facing the claim that its executives have committed bank fraud.
What Is Tether (USDT)?
To accurately understand the situation, we must understand what Tether is. Tether is a stablecoin – that is, its price is tied to the price of the dollar. One tether is always equal to one dollar. And much of the market trades their favorite cryptocurrencies against Tether.
So far, so good, right? What has allowed Tether to become one of the top 10 cryptocurrencies is that it provides a certain guarantee. In theory, every Tether circulating in the market is backed by fiat currency. This has given Tether the aura of being a safe and reliable cryptocurrency.
Why Is Tether In The Spotlight?
An ocean of controversy has surrounded the stablecoin since 2017. Since then the company behind Tether, Tether Ltd. has been accused of not being transparent. Many have criticized the way the company managed the money or how it backed it.
So Tether is back in the headlines. According to Bloomberg, U.S. authorities are once again investigating Tether. This time it’s the company’s executives who are in the bull’s eye. This time the executives are suspected of bank fraud — a criminal charge that could splatter the entire market.
The Full Case Against USDT
The U.S. Treasury Department and Federal Reserve might also be concerned. Allegedly, they fear that USDT could jeopardize financial stability. They are not entirely sure whether certain transactions are masking money laundering. They also fear that some payments made in USDT may escape the traditional banking system.
And things don’t stop there. Allegedly, the US Department of Justice wants to investigate the events of previous years. Federal prosecutors are interested in whether the company concealed from banks that its operations were tied to cryptocurrencies.
And this is not the first time the U.S. has investigated crypto companies. We recently saw this example of Ripple. And all these events fill the market with tension – even if one does not trade in such cryptocurrencies.
Tether Fights Back
Nonetheless, Tether did not take long to respond to these disturbing allegations.
Company officials went all-in against Bloomberg. They affirm that the article was written based on unnamed sources and years-old allegations. They add that this was just a strategy to generate clicks on their website. And they believe it is an attempt to discredit them and to damage their image and reputation.
Last but not least, Tether is determined to keep working for what they believe in. They have claimed one of the top spots and have no intention of letting that go so easily. They are open to talking to law enforcement to clear up possible misunderstandings.
Will this be the end of the allegations against Tether? Hard to say. Yet, it does give some comfort that they are so open to speaking up and facilitating investigations. Only time will tell.