In the midst of its ongoing battle to maintain access to the international banking system, Singapore-based USDT stablecoin issuer Tether has resorted to utilizing a mix of fraudulent paperwork and obscured identities, as well as offshore companies, claims a new report by The Wall Street Journal.
USDT is pegged to the US dollar and is backed 1:1 with US dollar/liquid equivalents, as per Tether’s statements. At present, USDT is the biggest stablecoin in terms of market capitalization with $71.124 million tokens.
Tether’s trading volumes are generally on par with Bitcoin and Ethereum combined. According to CoinMarketCap, USDT transactions amounted to $37.239 million in the last 24 hours, compared to Bitcoin’s $25.65 billion and Ethereum’s $9.7 billion.
Tether and its Supporters Employ Unconventional Strategies to Sustain Banking Access
The Wall Street Journal’s report on Tether’s application of unorthodox techniques to maintain access to the global banking network dates back to 2017 when Wells Fargo & Co stopped processing operations from several of the crypto firm’s Taiwanese bank accounts. Tether’s lawsuit against the bank stated that this move posed “an existential threat to their business”.
The records highlighted by the Wall Street Journal showed that firms connected to Tether had opened new accounts in Taiwan, held in trust by Hylab Technology Ltd. executive Chrise Lee. However, the accounts were registered under the name Hylab Holdings Ltd. Additionally, another account was opened in Turkey by the company named “Unter Get get Über Durch land weil Hall da in out bei at darin dar Dar Deniz Royal Dis Ticaret”. This account has been accused by the US Department of Justice for possibly being used to launder money for terror groups.
Bitfinex, a related firm of Tether, declared that they had transferred $1 billion to the now-defunct Panama-based corporation Crypto Capital Corp in an effort to keep their banking access. As per the Wall Street Journal, Bitfinex and Tether have since been issued subpoenas by the US Commodity Futures Trading Commission (CFTC).
The recent probe into Tether has uncovered the use of faked documents and anonymous identities in order to open bank accounts. Bitfinex has previously asserted that they were deceived by Crypto Capital Corp., causing them to lose approximately $850 million. The documents unveiled deceitful tactics employed by Tether to gain access to the US banking system. This is seen in their attempts to open accounts with New York’s Signature Bank, which eventually had to be shut down.
To add to their troubles, Tether had a blacklisted individual associated with the account applications. Christopher Harbourne, the owner of AML Global was revealed to have 12% stake in both Tether and Bitfinex, although he was known by the alias Chakrit Sakunkrit. Despite being granted a temporary account, it was soon closed as the Signature Bank executives detected connections with Bitfinex, rather than Kraken as AML Global had claimed.
The news of this investigation has caused a dip in the crypto markets, with Bitcoin and Ether dropping 4.8% and 5.0% respectively. This has led to the spread of FUD, as some USDT claims that it is not backed by any currency. As USDT is a significant source of liquidity, a large-scale bank run could cause huge losses to the crypto market.