Tether (USDT) Faces New U.S. Investigation, Bitcoin (BTC) Sees Minor Dip

The stablecoin Tether (USDT) has once again become the focus of market attention as it is reportedly under new legal scrutiny from U.S. authorities.

On the evening of October 31, Bloomberg reported that the U.S. Department of Justice is preparing to launch a new investigation into Tether (USDT), the largest stablecoin in the cryptocurrency market.

According to the report, U.S. officials had previously sought to charge Tether with “deceiving” the banks used by the company for transactions last year. However, the case was dropped after no solid evidence was found.

In recent developments, the Southern District of New York is reportedly handling the Tether case. This office is known for actively pursuing cryptocurrency-related cases in the U.S., with expertise in banking and tracing financial flows, according to Bloomberg.

See also: What is USDT?

On Twitter, Tether’s Chief Technology Officer, Paolo Ardoino, who represents the company publicly, dismissed Bloomberg's latest report as “old FUD rehashed.” Ardoino stated that the investigation news dates back to 2018 and that the company has been actively cooperating with authorities since then, accusing Bloomberg of sensationalizing the issue to create public confusion.

Tether is one of the most controversial entities in the crypto industry. Despite controlling USDT, the largest stablecoin with a current market cap of over $69 billion, the company has been criticized for its lack of transparency regarding reserve reports and its past holdings of high-risk assets.

In a 2021 investigative report, Bloomberg admitted difficulty in tracing Tether's reserve assets, claiming that their existence was unknown outside the company.

Read more: Bloomberg’s “shocking” report on Tether (USDT)

In 2019, Tether was involved in a lawsuit with the New York Attorney General’s office, accused of colluding with its sister company, Bitfinex, to conceal an $850 million shortfall. The lawsuit was settled in early 2021, with Tether/Bitfinex agreeing to a substantial fine.

Since then, Tether has actively reduced its exposure to high-risk assets. In early October, the company announced it had cut its commercial paper holdings from $8.5 billion at the end of June to just $50 million, shifting funds into U.S. government bonds, considered safer and akin to cash. However, Tether has yet to release a full audit of its reserve assets.

Following the latest FUD report on Tether, Bitcoin’s price has experienced a slight decline, temporarily reversing some of the gains it had made after a late “Uptober” surge in the final week of October.

15-Minute Chart of the BTC/USDT Pair on Binance at 10:45 PM on 31/10/2022