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DOJ reportedly considers filing criminal charges against Tether and Bitfinex execs

DOJ reportedly considers filing criminal charges against Tether and Bitfinex execs


A Bloomberg report claims the stablecoin’s origin story includes bank fraud

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A smartphone displays the Tether market value on the stock
Photo Illustration by Guillaume Payen/SOPA Images/LightRocket via Getty Images

More than three years after initial reports of a federal investigation into the cryptocurrency stablecoin Tether, Bloomberg is reporting that it remains a “potential” criminal case. In response to the report, the price of Bitcoin surged, briefly rising over $40,000 for the first time since mid-June.

Unlike Bitcoin or other cryptocurrencies, a stablecoin ties its value to another asset — which, in this case, is one US dollar — backed by actual money or other holdings. It’s useful for traders to instantly make moves without worrying about rapid swings in the market. However, as many have documented, going back to 2014 when Tether was introduced, there are parts of its history that don’t add up to the story it’s telling.

“It is business as usual at Tether”

It’s that early history that the report claims prosecutors are focused on — specifically if Tether executives committed bank fraud and hid the nature of its cryptocurrency transactions from banks. In February, Tether and its owner Bitfinex reached a settlement with the New York Attorney General that included paying $18.5 million in penalties without admitting or denying accusations from the AG that the companies “made false statements about the backing of the ‘tether’ stablecoin, and about the movement of hundreds of millions of dollars between the two companies to cover up the truth about massive losses by Bitfinex.”

In a statement, Tether called the story a “repackaging of stale claims” based on unnamed sources and old allegations. The company says, “Tether routinely has open dialogue with law enforcement agencies, including the U.S. Department of Justice, as part of our commitment to cooperation, transparency, and accountability...It is business as usual at Tether, and we remain focused on how to best serve the needs of our customers.”