The U.S. Department of Justice (DOJ) is intensifying its scrutiny of Tether (USDT), the world’s largest stablecoin, in a criminal investigation related to possible sanctions violations and money laundering concerns. Spearheaded by the U.S. Attorney’s Office in Manhattan, the probe is investigating whether Tether has broken laws that regulate financial transactions, raising concerns in the cryptocurrency community.
This is not the first time Tether has faced regulatory challenges. In previous years, the company has been criticized for its lack of transparency regarding the reserves backing USDT, and it settled with the Commodity Futures Trading Commission for $41 million in 2021 over misrepresentation of its reserve holdings. Despite this, Tether continues to dominate the stablecoin market, with a market capitalization exceeding $119 billion.
Adding to the tension, Ripple CEO Brad Garlinghouse recently commented that it is "clear" the U.S. government is taking significant action against Tether, possibly indicating broader regulatory pressure on stablecoins in the coming months. This comes as Ripple itself plans to launch its own dollar-backed stablecoin in 2024.
For investors and users, this increased scrutiny could lead to market disruptions, especially if regulatory actions impact Tether’s ability to maintain its 1:1 dollar peg.
