Cryptocurrency prices took a sharp turn on Friday afternoon after a Wall Street Journal report revealed that the U.S. Department of Justice is investigating Tether, the issuer of the largest stablecoin, for potential violations of sanctions and anti-money laundering regulations.
Stablecoins, which are cryptocurrencies pegged to traditional assets like the U.S. dollar, play a crucial role in the crypto market. Tether (USDT) stands out with a market cap exceeding $120 billion, making it the most widely used stablecoin.
Earlier in the day, the crypto market appeared to be thriving, with Bitcoin (BTC) approaching the $69,000 mark and hinting at a possible challenge to reach $70,000 for the first time in three months. However, the mood shifted dramatically following news of the investigation. Bitcoin dipped to as low as $66,500—nearly a 2% drop in just a few minutes—before recovering slightly to around $66,800. The broader CoinDesk 20 Index also fell by 2.3% during this period.
In response to the report, Tether’s Chief Technology Officer, Paolo Ardoino, took to X (formerly Twitter) to dismiss the claims, stating that the WSJ is “regurgitating old noise” and that there is no indication Tether is currently under investigation.
As uncertainty looms over Tether and the implications for the broader crypto market, investors are left grappling with the potential impact of regulatory scrutiny on the future of stablecoins.
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