Crypto Market Slump Amid Rumors of Tether’s Involvement in Financing Illegal Activities

News of an alleged ongoing investigation into Tether by U.S. law enforcement agencies caused anxiety in the crypto market, triggering a FUD effect and a temporary drop in the top 10 cryptocurrencies. The company’s CEO denied the rumors and revealed USDT’s reserve structure in an effort to restore confidence.

According to an exclusive Wall Street Journal article dated October 25, the U.S. government is investigating Tether. The publication cited its own sources.

The WSJ article states that the investigation is being conducted by the U.S. Attorney’s Office for the Southern District of New York, which is looking into the possible use of USDT to fund illegal activities and money laundering. In parallel, according to unnamed sources, the U.S. Department of the Treasury is considering sanctions against Tether for the active use of USDT in countries and entities under U.S. sanctions.

The cryptocurrency market fell after the publication. Bitcoin dropped by 2% and Ethereum by 1.7% within a few hours. Other top 10 cryptocurrencies such as BNB, Solana, and XRP also fell, reflecting the general market reaction to the rumors.

In a blog post, Tether described the journalists’ accusations as reckless and based on speculation. “It is wildly irresponsible for WSJ to write articles with reckless allegations with such certainty when no authorities have gone on the record to confirm these rumors, and no sources are named,” the company said in a statement. Paolo Ardoino, Tether’s CEO, stressed that no law enforcement agency or U.S. authority officially confirmed the rumors.

The company also insisted that the article deliberately omitted the fact that Tether actively works with law enforcement to prevent USDT from being used for illegal purposes. According to the company, it helped block more than $108 million in USDT linked to illegal activity since the launch of stablecoin in 2014.

Ardoino revealed Tether’s reserve structure while speaking at the Plan ₿ event in Lugano. He claims that USDT’s reserves include 82,454 BTC and over 48 tons of gold. He stressed that 85% of the company’s total reserves are in U.S. Treasuries, with the remaining 15% in various assets that allow Tether to keep USDT and other company assets stable in the face of market volatility. Ardoino also noted that Tether is actively working on transparency by regularly publishing asset data and working with auditors to verify reserves.

Earlier this year, the UN Office on Drugs and Crime (UNODC) reported that organized crime in Southeast Asian countries was actively using the USDT stablecoin. The company actively denied the allegations.

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