Shocking Allegations: Tether’s Issuer Reportedly Used Fraudulent Tactics For Banking Access
Benzinga – Tether (CRYPTO: USDT), faced a critical situation in late 2018 when its parent company and affiliates struggled to maintain access to the global banking system. A recent review of emails and documents revealed that the companies took the recourse of shadowy intermediaries, fake documents, and shell companies to reinstate their access as reported by the Wall Street journal.
According to the report, one of Tether’s intermediaries, a Chinese-based tether trader, attempted to bypass the banking system by providing counterfeit sales invoices and contracts to facilitate every deposit and withdrawal transaction. The owner of Tether Holdings Ltd., Stephen Moore, signed these fake invoices and contracts but later recommended abandoning the practice as too risky.
See Also: Tether Freezes $46M In USDT Owned By FTX In Response To Law Enforcement Request
WSJ claims that the U.S. Justice Department has been investigating Tether. The inquiry, which the Manhattan U.S. attorney’s office oversees, has caused concern for Tether’s future. However, the company denies the Wall Street Journal’s report, calling it wholly inaccurate and misleading. Tether has assured the public that it has a world-class compliance program and complies with legal requirements.
Tether’s significance lies in its unique role as a stablecoin that is pegged to the U.S. dollar, providing a bridge linking crypto volatility and USD stability. Its value stability attracts investors who view it as a money-market account at a brokerage. USDT usually trades more volume than Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) combined, according to CoinMarketCap.
Tether’s efforts to maintain banking access became urgent when Wells Fargo & Co. stopped processing transactions from several Taiwanese accounts that Tether was using in March 2017. The companies quickly found solutions by opening new accounts using established business executives and tweaking company names. These tactics have since raised concerns about potential fraud and money laundering issues, leading to increased scrutiny from regulatory authorities.
See Also: Crypto Should Get Back to Its Roots to Break Free from Traditional Finance. An Interview with CTO of Tether Paolo Ardoino
While the investigation into Tether’s efforts to open bank accounts around 2018 continues, it remains unclear if the investigators are scrutinizing the company’s activities during that period. Tether has had open dialogue with law enforcement agencies, and it does not appear that the Justice Department is actively investigating the company. However, the investigation has caused concern in the cryptocurrency industry, and the outcome remains to be seen.
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