https://www.capitalbrief.com/briefing/us-probes-tether-for-money-laundering-violations-wsj-d7267229-72c2-42e8-95c2-3584b6165a3e/

The news: The US government is investigating cryptocurrency firm Tether for possible breaches of anti-money laundering (AML) and sanctions laws, The Wall Street Journal reported citing unnamed sources.

The criminal investigation is examining whether its token, also called tether, has been used to finance drug trafficking, terrorism and other illegal activities, the paper said.

The context: The investigation is being undertaken by prosecutors at the Manhattan US attorney’s office, while the Treasury Department is considering sanctions on Tether due to its cryptocurrency’s use by US-sanctioned individuals and groups, including Hamas and Russian arms dealers. Such sanctions would bar Americans from conducting business with Tether.

The cryptocurrency firm has previously faced regulatory issues, including a US$61 million ($92 million) settlement over asset misrepresentation. Criminal charges against Tether would also be bad news for Cantor Fitzgerald, the paper said, as it manages much of Tether’s US$80 billion reserves.

Last month, Tether said it had frozen around 1,850 crypto wallets and recovered approximately US$114 million in assets.

What they said: Tether told the paper it wasn’t aware of a broad investigation.

“To suggest that Tether is somehow involved in aiding criminal actors or sidestepping sanctions is outrageous,” the company told the paper. “We work actively with US and international law enforcement to combat illicit activity,” it added.