Tether faces probe into bank fraud by US DoJ

The stablecoin universe is so far dominated by two main tokens, Tether and USD Coin. Tether is already more than 60 percent of the total stablecoins currently issued, worth about $100 billion. [Image: Shutterstock]

The U.S. Department of Justice is probing possible bank fraud by executives behind the Tether digital token. The act was committed during the nascent stages of its cryptocurrency business, according to Bloomberg.

The probe is focusing on events from several years ago when Tether, a stablecoin launched in 2014, was in its early stages, the report said.

The agency is examining whether Tether concealed from banks that transactions were linked to crypto, the report added, citing three people with direct knowledge of the matter.

“Tether routinely has open dialogue with law enforcement agencies, including the DOJ, as part of our commitment to cooperation and transparency,” the company reportedly said in a statement.

Earlier this year, Tether and its sister cryptocurrency exchange Bitfinex had to pay $18.5 million fine to settle charges it commingled client and corporate funds to cover up $850 million that went missing.

Bitfinex was accused of having sent the $850 million to Crypto Capital Corp, a payment processor believed to be in Panama, without telling clients, and after the funds went missing, draining at least $700 million from Tether's reserves.

The New York Attorney General said the diversion broke Tether's public promise to investors that its currency had been backed one-to-one by U.S. dollars, a practice she said had begun in 2017. Bitfinex and Tether did not admit or deny wrongdoing in agreeing to settle.

The stablecoin universe is so far dominated by two main tokens, Tether and USD Coin. Tether is already more than 60 percent of the total stablecoins currently issued, worth about $100 billion.

[Input from Reuters]