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With the US DOJ hinting at another investigation on Tether executives, the crypto trader community isn’t disturbed by the development calling it just another Tether FUD.
On Monday, July 26, the US Department of Justice (DOJ) has initiated an investigation by sending letters to Tether executives for their alleged involvement in bank fraud. The top investigation agency will verify whether if the Tether executives misled the bank, reports Bloomberg.
Previous reports also suggested that Tether concealed some of the transactions relating to USDT. Thus, criminal proceedings for the same could begin in a short time. Tether (USDT) has been the backbone and the oil of the crypto market facilitating millions of dollars worth of trade. Tether said that it will fully comply with the investigation going ahead. The USDT issuer further added:
“Tether routinely has an open dialogue with law enforcement agencies, including the DOJ, as part of our commitment to cooperation and transparency”.
This is also not the first time that Tether will be engaging with a regulator. Back in 2018, the firm was facing a civil lawsuit filed by the New York Attorney General (NYAG). Although for most of the time USDT has been trading for $1 it has temporarily lost parity at times. In 2018, USDT dropped to 92 cents over concerns of collateral with Bitfinex.
The regulator accused Tether of helping its parent company Bitfinex for hiding its losses. The case finally came to a settlement earlier in February 2021 with Tether paying $18.5 million in fine.
Traders Shrug Off Concerns amid DOJ Attention to Tether
Since Tether has been routinely engaging with regulatory issues in the last three years, traders aren’t perturbed. The reaction to the DOJ investigation looks mild as traders shrug off concerns. Darius Sit, co-founder of Singapore-based QCP Capital said Tether “gets sued every other day”. He noted that the nature of use and popularity of USDT draws the regulatory ire. Darius further added:
“The FUD is the reason [USDT] is popular, right? There’s FUD because it’s unregulated and people use it because the SEC (the U.S. Securities and Exchange Commission) can’t just freeze it.”
As we can see, the US DOJ investigation has little impact on the price of Bitcoin and the overall crypto market. Hassan Bassiri, vice president at Los Angeles-based asset management firm Arca said the “market clearly doesn’t care about the seemingly bad DOJ news because the sentiment has shifted to bullish”. Speaking to CoinDesk, Andrew Tu, an executive at quantitative trading firm Efficient Frontier, said:
“My guess is that this isn’t something really telling until [Tether] gets actually convicted of this crime. Also because they are being investigated for past events, whereas the New York attorney general office settled with Tether just recently, the market probably doesn’t see the Tether stablecoin itself as being at risk.”
Other analysts have called this Bloomberg report more of a noise than a signal. After numerous allegations for not having enough USD to back the stablecoin, Tether disclosed its treasury allocation.