Tether (USDT) Under New U.S. Investigation, Bitcoin (BTC) Drops Slightly

The stablecoin Tether (USDT) has once again become the center of attention as it faces renewed scrutiny from U.S. authorities.

Tether (USDT) Under New U.S. Investigation, Bitcoin (BTC) Drops Slightly

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

According to Bloomberg, U.S. authorities had previously attempted to accuse Tether of “misleading” banks used by the company for transactions last year. However, the case was shelved after insufficient evidence was found.

In the latest development, the Southern District of New York is reportedly taking over the Tether case. This office is known for its aggressive pursuit of cryptocurrency-related cases, with expertise in banking and tracking financial flows, according to Bloomberg.

For more: What is USDT?

Paolo Ardoino, Tether's CTO and the company's spokesperson, took to Twitter to dismiss Bloomberg's latest article as "old FUD rehashed." Ardoino claimed that news of the investigation dates back to 2018 and that Tether has since been actively cooperating with authorities to clarify the situation. He accused Bloomberg of sensationalizing the story to mislead the public.

Tether is one of the most controversial companies in the crypto industry. Despite holding USDT, the largest stablecoin with a current market cap exceeding $69 billion, the company has been criticized for its lack of transparency in providing proof of reserves and its past involvement in high-risk assets.

In a 2021 investigative piece, Bloomberg admitted defeat in tracing Tether’s reserve backing, which was stated to be known only to the company itself.

Details: Bloomberg’s “Bombshell” Report on Tether (USDT)

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

Since then, Tether has been actively reducing its holdings in risky 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. Tether has shifted its funds into U.S. government bonds, considered safer and equivalent to cash. However, Tether has yet to release an audited report of its reserves.

Following the latest FUD about Tether, Bitcoin's price saw a slight drop, temporarily erasing some of the gains made during the “late Uptober” surge in the last week of October.

15m BTC/USDT Chart on Binance as of 10:45 PM, 31/10/2022