• A criminal investigation is looking into whether #Tether is being used by third parties for illicit activities such as terrorism and hacking, WSJ reports.

  • The Treasury Department, meanwhile, has been weighing sanctioning Tether because of the stablecoin’s use by U.S.-sanctioned people and groups, according to WSJ.

U.S. investigators are probing Tether, the company behind the world's largest stablecoin, over potentially breaking anti-money laundering rules and violating sanctions, according to reporting from The Wall Street Journal.

That investigation is looking into whether its crypto is being used by third parties for illicit activities such as terrorism, drug trading and hacking, WSJ reported on Friday, citing people familiar with the matter.

The Manhattan U.S. attorney's office is handling a criminal investigation, while the Treasury Department has been weighing sanctioning Tether because of the stablecoin's use by U.S.-sanctioned people and groups, including the terrorism group Hamas and bad actors in Russia. If the Treasury Department decides to bring sanctions against Tether, that would mainly block Americans from doing business with Tether, WSJ said.

The Treasury Department and the U.S. Attorney's Office for the Southern District of New York did not immediately respond to a request for comment from The Block.

Tether CEO Paolo Ardoino did take to X to push against WSJ's report.

"As we told to WSJ there is no indication that Tether is under investigation. WSJ is regurgitating old noise," Ardoino said. "Full stop."

A Tether spokesperson criticized the WSJ, saying that the article was based on “pure rank speculation.”

“These stories are based on pure rank speculation despite Tether confirming that it has no knowledge of any such investigations into the company,” the spokesperson said in an emailed statement to The Block. “The article also carelessly glosses over Tether’s well-documented and extensive dealings with law enforcement to crack down on bad actors seeking to misuse tether and other cryptocurrencies.”

Tether has faced scrutiny over the years over its stablecoin, which is pegged to the U.S. dollar. The U.S. Commodity Futures Trading Commission said Tether made "untrue or misleading statements and omission of material fact" related to the stablecoin. The regulator said Tether falsely claimed the stablecoin was fully backed by U.S. dollars.

U.S. lawmakers have also scrutinized Tether and called on the U.S. Justice Department to investigate the firm over its possible involvement in illicit finance. Tether has said it is working with global law enforcement to deter illicit activities.

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