Tether executives are facing a criminal probe over whether they committed bank fraud, report says

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In this photo illustration, a smartphone displays the Tether market value on the stock exchange via The Crypto App. Photo Illustration by Guillaume Payen/SOPA Images/LightRocket via Getty Images

Executives from stablecoin operator Tether are said to be facing a criminal probe over whether they committed bank fraud, according to a report on from Bloomberg on Monday.

Federal prosecutors are looking into whether Tether concealed from banks that transactions were linked to crypto, said Bloomberg, citing three people with direct knowledge of the matter who asked not to be named because the investigation is confidential.

The US Justice Department’s investigation is focused on conduct that occured at Tether several years ago, the report said.

According to one of Bloomberg’s sources, federal prosecutors sent letters to individuals at Tether informing them that they’re targets of an investigation. The notices also signal that a decision on whether to bring a case could be made soon. Senior Justice Department officials will ultimately determine whether charges are warranted.

If the probe does find executives guilty on criminal charges, it would be a significant development in the US’s crackdown on digital currencies. Tether’s dollar-linked cryptocurrency is the largest stablecoin with more than $US62 ($AU84) billion in circulation. The stablecoin is used by investors to trade bitcoin without needing to exchange crypto for fiat money, a process that takes extra time and money.

It’s estimated that Tether underpins more than half of all bitcoin trades, Bloomberg said.

Tether responded to the Bloomberg report in statement Monday afternoon, saying it is “business as usual at Tether.”

“Today, Bloomberg published an article based on unnamed sources and years-old allegations, patently designed to generate clicks,” Tether said. “This article follows a pattern of repackaging stale claims as ‘news.’ The continued efforts to discredit Tether will not change our determination to remain leaders in the community.”

The company continued: “Tether routinely has open dialogue with law enforcement agencies, including the U.S. Department of Justice, as part of our commitment to cooperation, transparency, and accountability.”