Stablecoin issuers told Tether this CryptoSlate in a Feb. 16 statement that it is actively averting misuse of stablecoin technology by cooperating with global law enforcement agencies.
The comments followed comments from Caroline Hill, Senior Director of Global Policy and Regulatory Strategy at Circle, during a House Financial Services Committee hearing entitled “Crypto Crime in Context Part ll: Examining Approaches to Combat Illicit Activity,” where authorities were urged to scrutinize Tether’s alleged practices. involvement in the financing of terrorism.
Hill apparently directly attacked stablecoin competitor Tether in response to North Carolina Congressman Wiley Nickel’s questions about Tether, stating:
‘I hope they do [the Treasury Department] We are looking at this seriously given Tether’s reputation and the data we have seen that they contribute to the financing of terrorism.”
About this, Paolo Ardoino, CEO of Tether, said:
“Misleading Congress is a shocking act of desperation and those who do it should be ashamed of themselves. Spouting lies and going around in circles will not get you anywhere.”
Ardoino continued that his company has done more than anyone to combat illegal crypto activity and remains fully committed to continuing the fight.
US regulators can ‘exercise control’ over Tether, says JPMorgan
JPMorgan analysts said US regulators, particularly the Office of Foreign Assets Control (OFAC), are “exerting control” over Tether’s offshore use.
The analysts cited OFAC’s sanction against Tornado Cash, a crypto mixer operating on the Ethereum blockchain, as an example of such controls. In 2022, OFAC approved the Money Laundering Facilitation Protocol, forcing Tether to freeze funds in the wallets covered by the sanctions.
Tether told CryptoSlate that it is “monitoring Treasury Department OFAC sanctions” and cooperating with law enforcement agencies in various jurisdictions.
“We monitor Treasury OFAC SDN sanctions and work with law enforcement agencies in 19 jurisdictions around the world, including working directly with the U.S. DOJ and the U.S. Secret Service,” Ardoino said.
Analysts further predicted that upcoming stablecoin regulations would reduce Tether’s attractiveness due to its perceived lack of transparency and compliance with KYC/AML standards. This research could be extended to the DeFi sector, where the USDT serves as collateral and liquidity for various protocols.
Furthermore, the analysts argued that Tether’s current disclosures are insufficient to allay concerns, highlighting S&P Global’s weak rating on its ability to maintain its peg to the US dollar.
Last month, the Wall Street giant criticized Tether’s dominance in the crypto sector, drawing the ire of Ardoino, who denounced the bank’s perceived double standards.