Tether Faces Controversy Over Account Deactivations

• Tether emphasizes compliance and monitoring in response to account deactivations.
• NYAG raises concerns about customer confidentiality in Tether’s settlement case.

Tether, the leading issuer of the stablecoin USDT, has responded to allegations that it deactivated the accounts of major cryptocurrency firms, including MoonPay. The claims were based on documents released by the New York Attorney General (NYAG). It revealed that Tether had terminated approximately 29 accounts. That included BlockFi, CMS Holdings, and Galois Capital.

Although Tether did not disclose the specific reasons for the account terminations, the company stated that it would refrain from commenting on individual relationships. However, it emphasized that all individuals associated with the deactivated accounts had undergone thorough compliance checks during the onboarding process . They were subject to continuous monitoring, as per Tether’s compliance policies.

Tether Account Scandal

It is worth noting that the NYAG investigation into Tether and its sister company Bitfinex, which centered around allegations of misappropriating $850 million, concluded in February 2021. However, it has recently come to light that certain documents related to the investigation extend until around June of the same year. The NYAG obtained these documents, although identifying information within them has been redacted.

As part of a settlement between the parties involved, Tether agreed to pay a penalty of $18.5 million. And cease trading activities in New York. Subsequently, media outlets and major crypto media sought access to Tether’s initial quarterly report under the Freedom of Information Act. However, it objected to the request, citing the need to safeguard its customers’ confidential information from potential exploitation.

Despite Tether‘s objection, the NYAG granted media outlets access to the documents, revealing the deactivation of numerous company accounts. While the reasons behind these account terminations have not been disclosed, Tether’s emphasis on rigorous compliance checks during onboarding and ongoing monitoring indicates the company’s commitment to meeting regulatory requirements and upholding the integrity of its operations.

The disclosure of the account deactivations has sparked speculation and raised questions within the cryptocurrency community. However, it is important to await further information or statements from the involved parties before making assumptions about the motives and implications of these actions. As the cryptocurrency industry continues to evolve, adherence to compliance standards and transparency is crucial.