Reports have surfaced that entities behind one of the world’s top cryptocurrencies falsified documents in an attempt to gain access to the global banking system.
The Wall Street Journal has seen emails indicating that owners of Tether Holdings Ltd. used false information when attempting to open bank accounts. Stephen Moore, one of the owners, remarked in an email that a major tether trader from China was trying to “circumvent the banking system” by providing sham invoices and contracts.
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Moore went on to say that it would be too risky to argue the use of such falsified documents in the case of a money laundering investigation. The emails, which are part of a cache viewed by the WSJ, also show that the companies behind both tether and Bitfinex, a major cryptocurrency exchange, were actively trying to keep access to the banking system by disguising their identities.
The Department of Justice is said to be investigating Tether, though it is unclear if the investigation is focusing on the 2018 effort to open accounts with forged documents.
Stablecoins, like Tether, are a type of cryptocurrency that is tied to an underlying asset such as gold or a fiat currency. This allows them to remain relatively stable and not experience large fluctuations, unlike other digital coins such as Bitcoin. This has caught the eye of U.S. regulators, with Treasury Secretary Janet Yellen recently meeting with other federal regulators to discuss potential plans to regulate the unique currency.
The news about Tether and Bitfinex comes on an already difficult day for the cryptocurrency market, with Bitcoin experiencing its largest drop in a month after speculators began to doubt Silvergate Capital’s health.
The week’s rally of the major cryptocurrency was cut short after it dropped more than 5% following a series of weeks. On Friday, Silvergate Bank declared that it would not be able to meet the deadline of its 10-K filing which is mandated by the Securities Exchange Commission and outlines the financial status of the company. Silvergate further reported that they would take more time to analyze inquiries and investigations related to regulatory matters.
Investors are concerned that the delay may indicate that the crypto-bank is in trouble.
