US Tether Bank Fraud Investigation Changes Hands Within the DOJ: Report

https://www.coindesk.com/policy/2022/10/31/us-tether-bank-fraud-investigation-changes-hands-within-the-doj-report/?utm_medium=referral&utm_source=rss&utm_campaign=headlines

A criminal investigation into whether Tether’s executives committed bank fraud in the early days of the stablecoin issuer’s existence has been reassigned after months of stagnation, according to Bloomberg.

The Department of Justice’s (DOJ) probe will now be led by U.S. Attorney Damian Williams in the Southern District of New York (SDNY), Bloomberg said, citing people familiar with the matter.

Bloomberg reported in July last year that federal prosecutors had been digging into whether Tether hid the nature of its crypto-related transactions from the banks it was working with during the fledgling days of its business.

Responding in a blog post published Monday, Tether said it is in open dialogue with law enforcement agencies, “helping the department … with some of the biggest cybercrime and national security cases in the country” and added that “Tether executives have had no interaction with the DOJ in connection with any investigation for well over a year and the DOJ does not appear to be actively investigating Tether.”

Still, the stablecoin issuer has long been plagued by accusations of murky banking relationships and opaque accounting practices.

In February 2021, Tether and its sister company, Bitfinex, paid $18.5 million to settle a nearly two-year-long investigation with the New York Attorney General’s (NYAG) office into whether it covered up the loss of nearly $1 billion in customer funds. In the settlement agreement, the NYAG said Tether used various banks but was suspended from some, including Wells Fargo, for unspecified reasons.

The SDNY has become something of a hot spot for crypto cases in recent years. Both the Celsius Network and Voyager Digital bankruptcy cases are being presided over by judges from the district’s bankruptcy court. The SDNY has also developed a reputation for working with other agencies, including the U.S. Securities and Exchange Commission (SEC) to bring crypto-centric criminal cases.

Former federal prosecutors speaking to Bloomberg speculated that the SDNY’s crypto expertise could be the reason for the unusual decision to move the investigation.