DOJ Investigates Tether for Possible Violations, Shakes Crypto Markets

Tether Investigation Raises Concerns over Stablecoin Reliability

October 27, 2024

Updated: October 27, 2024

2-Minute Read

News

Concerns over the reliability of stablecoins have escalated following a probe by the U.S. Department of Justice (DOJ) into possible misuse of Tether's USDT stablecoin in illegal activities.

USDT Loses Dollar Peg Amid DOJ Investigation

Tether's USDT briefly lost its dollar peg during the DOJ's inspection, impacting crypto market prices and triggering a selloff. The token's value plummeted to around 99.81 cents.

DOJ Inquiry into Tether's USDT

The DOJ is investigating whether USDT has been used by third parties for unauthorized activities such as drug trafficking, cybercrime, and terrorism financing. The probe focuses on transactions involving sanctioned individuals or organizations.

Market Reaction to DOJ Probe

News of the potential DOJ investigation led to a decline in USDT's value, which in turn affected the broader crypto market. Bitcoin dropped by approximately 3.3%, while Solana and Dogecoin fell by 5.5% and 5.6%, respectively.

Regulatory Scrutiny Raises Questions

Tether has faced ongoing scrutiny over its financial practices and transparency. Critics have questioned whether USDT is fully backed by reserves. Despite its large market cap, concerns persist regarding the token's compliance with regulations.

Conclusion

The DOJ's investigation into Tether highlights the growing need for oversight and regulation in the stablecoin sector. The probe has raised questions about the stability and future role of stablecoins in the digital asset industry.