Federal Investigators Probe Tether for Sanctions Violations

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As a seasoned crypto investor with over two decades of experience in the financial industry, I find myself closely following the latest developments regarding Tether, especially given my past roles as a compliance officer and risk manager at several major banks.

As a researcher, I’ve been closely observing the developments surrounding Tether, a cryptocurrency company. Reports from reputable sources like the Wall Street Journal suggest that U.S. federal authorities have stepped up their examination of this firm, focusing on possible breaches of sanctions regulations and anti-money laundering laws.

The Manhattan U.S. attorney’s office is spearheading a criminal inquiry aimed at examining if Tether has been employed by external entities for illicit activities like drug trading, terrorism, and cybercrime. Additionally, the probe aims to ascertain whether it has been used to launder proceeds derived from such illegal activities.

In important controlled areas, Tether has become a crucial instrument, leading to increased examination by governments. There are discussions within the Treasury Department about potentially halting Tether’s operations, thus barring U.S. citizens from engaging in transactions with the company, because of its association with sanctioned entities such as Hamas and Russian arms dealers.

The Justice Department began investigating Tether years ago, initially focusing on whether some backers committed bank fraud using falsified documents to access the global banking system.

Tether disputes any accusations of criminal activity, labeling them as “excessive.” They emphasize their collaboration with U.S. and global law enforcement agencies. The firm has taken steps such as freezing digital wallets and partnering with analytical tools to monitor transactions, maintaining that the transparency of blockchain technology aids in discouraging illegal activities and assists authorities in tracing transactions.

The regulatory challenges faced by Tether stem from heightened attention in the cryptocurrency industry. Notably, the founder of Binance, Changpeng Zhao, was given a four-month prison sentence and ordered to pay a fine of $4.3 billion due to breaches related to anti-money laundering.

Previously, Tether had to pay a fine of $61 million due to a settlement with New York authorities over misrepresentation of assets. The possibility of criminal charges could potentially impact Cantor Fitzgerald, the company that handles Tether’s approximately $80 billion in reserves under CEO Howard Lutnick, who is an associate of Donald Trump.

The Trump campaign chose not to address the ongoing federal inquiry, instead praising Lutnick as a well-known entrepreneur and benefactor. They highlighted his position as a co-chair for the Trump-Vance Transition Team on a volunteer basis.

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2024-10-26 11:50