Tether Under Fire: Scandals Plague World’s Most-Traded Cryptocurrency
Tether, the leading stablecoin, is facing new challenges. An article published by the Wall Street Journal on Friday alleges that the company relied on forged documents and shell corporations to gain access to the banking system.
The publication cites correspondence and records as evidence that Tether’s parent company went to great lengths to maintain connections to the traditional financial system and establish bank accounts.
One email cited by the WSJ stated that a prominent Chinese trader attempted to bypass the banking system by submitting fraudulent invoices and contracts for each deposit and withdrawal.
Stephen Moore, one of the owners of Tether Holdings Ltd., acknowledged this activity before opting to disassociate with the trader as it was deemed too dangerous.
Tether’s use of problematic third-party entities that possessed seized assets worth hundreds of millions of dollars and links to terrorist organizations is also highlighted in the WSJ article. Additionally, the US Justice Department is reportedly investigating the company.
Tether has responded to the allegations, stating that the report is “wholly inaccurate and misleading.” It also emphasized that Bitfinex and Tether uphold applicable legal requirements for Anti-Money Laundering, Know Your Customer, and Counter-Terrorist Financing.
Tether’s business is centered around the issuance of USDT, a stablecoin that ranks third globally in terms of market capitalization at $71 billion. As a stablecoin, USDT is backed by a stable asset like the US dollar, making it a popular cryptocurrency to quickly enter and exit trades without using traditional banks or fiat currency.
READ MORE: UK Banks Crack Down on Crypto: HSBC and Nationwide Join the Ban
Tether is especially popular in markets where dollars are restricted or unavailable, as well as in decentralized finance (DeFi), which aims to disintermediate banks.
USDT and other stablecoins simplify the process of converting cryptocurrencies into traditional currencies on an exchange. Despite its success, Tether has been the subject of controversy, having not yet provided proof of the US dollar backing of its stablecoin and lacking independent audits.
In 2021, Tether agreed to stop operating in New York after an investigation by the New York Attorney General found that it had made false claims about the stablecoin’s backing.
Alexander Stefanov
Reporter at CoinsPress
Alex is Editor-in-Chief of Coinspress and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
