Crypto Rally Foiled by Report of DOJ Probe of Tether

Bitcoin appeared poised to make another run at $70,000, but a WSJ story of a criminal probe into the stablecoin issuer sent prices tumbling.

Cryptocurrency prices experienced a pullback on Friday afternoon in the U.S. after a Wall Street Journal report revealed that the U.S. government is investigating Tether, the issuer of the world’s largest stablecoin, over potential violations of sanctions and anti-money laundering (AML) rules.

Tether (USDT), which has a market capitalization of over $120 billion, is the most widely used stablecoin in the cryptocurrency market. Its value is pegged to another asset, usually the U.S. dollar, making it a key player in the global crypto ecosystem.

Earlier in the day, cryptocurrency prices had been rising, with Bitcoin (BTC) approaching the $69,000 mark and possibly on track to challenge the $70,000 level for the first time in three months. However, after news of the Tether investigation broke, Bitcoin dropped sharply to around $66,500, a nearly 2% decline within 24 hours. The broader crypto market, represented by the Crypto Index, was also down by 2.3% during the same period.

In response to the news, Paolo Ardoino, Tether’s Chief Technology Officer, took to X (formerly Twitter) to dismiss the report, calling it a regurgitation of “old noise.” He stated that there is no indication that Tether is currently under investigation by U.S. authorities. Despite his reassurances, the market reaction was significant, as Tether’s role in the broader cryptocurrency ecosystem is crucial, and any regulatory scrutiny could have widespread implications.