Cryptocurrency prices took a hit during U.S. afternoon hours on Friday following reports of a Department of Justice (DOJ) probe into stablecoin issuer Tether for potential violations of sanctions and anti-money laundering regulations. Stablecoins like Tether are a type of cryptocurrency that are pegged to the value of another asset, often the U.S. dollar. With a market cap exceeding $120 billion, Tether (USDT) is the most widely used stablecoin in the market.
Earlier in the day, prices of cryptocurrencies had been rising, with Bitcoin (BTC) inching close to the $69,000 mark, sparking hopes of surpassing $70,000 for the first time in three months. However, news of the DOJ probe caused Bitcoin to drop to as low as $66,500, representing a nearly 2% decrease over the past 24 hours before recovering slightly to $66,800. The broader cryptocurrency market, as measured by the CoinDesk 20 Index, was down by 2.3% during the same period.
Paolo Ardoino, the Chief Technology Officer of Tether, responded to the news by stating that the reports were simply “regurgitating old noise,” and he emphasized that there was no indication that Tether was under investigation. Despite the reassurances from Tether’s CTO, the market reacted negatively to the news of the probe, dampening hopes for a sustained crypto rally.
It is important to note that CoinDesk, the source of the initial report, is a reputable media outlet that focuses on covering the cryptocurrency industry. The publication follows strict editorial policies to ensure integrity, independence, and freedom from bias in its reporting. CoinDesk is part of the Bullish group, which is involved in owning and investing in digital asset businesses and assets. As a result, employees at CoinDesk, including journalists, may receive compensation in the form of equity from the Bullish group.
The news of the DOJ probe into Tether serves as a reminder of the regulatory challenges that the cryptocurrency market continues to face. As the industry matures, regulatory scrutiny is increasing, and market participants must navigate these challenges to ensure the long-term sustainability and growth of the market. Investors should stay informed about regulatory developments and be prepared for potential fluctuations in prices as a result of regulatory actions.
Overall, the cryptocurrency market remains volatile and sensitive to news events, as demonstrated by the sharp reversal in prices following reports of the Tether probe. It is essential for investors to conduct thorough research, stay updated on market developments, and exercise caution when trading in cryptocurrencies to mitigate risks associated with regulatory uncertainties.