Tether Used Fake Documents to Open Bank Accounts: WSJ

Tether’s troubles continue. According to a Friday WSJ report, companies backing the world’s biggest stablecoin used fake documents and shell companies to help its parent company get into the banking system. 

The Journal cites emails and documents to claim that the company behind USDT, the most-traded cryptocurrency, went to extraordinary lengths to stay connected to the traditional financial system and open bank accounts. 

Citing an email, the WSJ reported that one major Chinese trader tried to “circumvent the banking system by providing fake sales invoices and contracts for each deposit and withdrawal,” Stephen Moore, one of the owners of Tether Holdings Ltd., admitted. 

Moore then decided to drop the backer, claiming it was “too risky,” according to the WSJ. 

The WSJ also said it had seen documents showing that Tether used problematic third parties that used “hundreds of millions of dollars of seized assets and connections to a designated terrorist organization.”

It added that the U.S. Justice Department is currently investigating Tether. 

I’m at the PlanB anniversary in #lugano
So much energy and people excited to talk about #Bitcoin
While I was on on stage I heard some clown honks, pretty sure was WSJ.
As always ton of misinformation and inaccuracies. Poor guys, must be difficult be them but need better media.

— Paolo Ardoino 🍐 (@paoloardoino) March 3, 2023

Tether said in a Friday statement that the WSJ report was “wholly inaccurate and misleading.”

“Bitfinex and Tether have world-class compliance programs and adhere to applicable Anti-Money Laundering, Know Your Customer, and Counter-Terrorist Financing legal requirements,” the company added. 

Tether’s business is minting USDT—the third-largest cryptocurrency after Bitcoin and Ethereum, with a market cap of $71 billion.

USDT is the most-traded digital asset: as a stablecoin—a cryptocurrency backed by a stable asset, such as the U.S. dollar—people use it to quickly enter and exit trades without using a traditional bank or fiat currency. Tether is particularly popular in markets where dollars are restricted or unavailable, and in DeFi, which seeks to disintermediate banks.

Stablecoins like USDT streamline the process of turning Bitcoin—or any other cryptocurrency—into dollars, euros, or yen on an exchange. 

But Tether has long been a controversial company. It has yet to provide documentation to prove that its stablecoin is backed by U.S. dollars and the entity is not independently audited. 

In 2021, Tether agreed to no longer do business in New York after a two-year New York Attorney General investigation found it had “made false statements about the backing” of its stablecoin. 

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