More trouble for tether

The bad news just keeps coming for Tether Limited, the issuer of the tether stablecoin that’s pegged one-to-one with the U.S. dollar. Yesterday, it was reported the U.S. Justice Department has launched a probe into whether executives behind both the digital token and the Bitfinex crypto exchange committed bank fraud in Tether’s early years.

The “potential criminal case,” first reported by Bloomberg, “would have broad implications for the cryptocurrency market.” According to reports, federal prosecutors are scrutinizing whether Tether concealed from banks that transactions were linked to crypto, citing three unnamed sources with direct knowledge of the matter.

Instability for stablecoins: Tether, along with other stablecoins USDC and BUSD, is controversial due to concerns it doesn’t have the reserves to justify its dollar peg and its huge $50 billion creation of tether tokens over the last year.

Yellen making waves: Last week, Treasury secretary Janet Yellen said during a meeting of the President’s Working Group on Financial Markets that regulators must “act quickly” in considering new rules for stablecoins.

Settle a bet: In February, Tether agreed to pay an $18.5 million fine to end a New York probe it covered up $850 million of losses without admitting or denying the allegations.

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