Tether, the largest dollar-backed stablecoin, may pose a new risk to the cryptocurrency market. Bloomberg reported Tether Executives are facing a criminal probe by the U.S. Justice Department into bank fraud. In response, Tether issued a statement denying the article’s claims, adding that it’s “business as usual at Tether.”
Tether’s dollar-pegged stablecoin USDT has been widely used to fund purchases of crypto like Bitcoin (BTC). In the past 12 month, USDT’s market cap in circulation recorded a sixfold rise to $62 billion.
According to Bloomberg, the Justice Department investigation focuses on whether executives behind Tether committed bank fraud during Tether’s early days. Specifically, federal prosecutors are exploring whether Tether hid from banks the fact its transactions were linked to cryptocurrency.
“Tether routinely has open dialogue with law enforcement agencies, including the DOJ, as part of our commitment to cooperation and transparency,” Tether said in a statement. Bloomberg’s article is based on “unnamed sources and years-old allegations, patently designed to generate clicks,” Tether said.
Bloomberg previously reported in 2018 that the DOJ was investigating whether Tether and Bitfinex were pumping bitcoin’s price.
At the time of writing (27 Jul, 10:30 AM, GMT+8), Bitcoin has dropped below the $40,000 level to $37,066.35, down 2.9% in the previous 24 hours. Ethereum is trading at $2,184.63, down 5.2%.
Ex-HKMA Chair Reveals New “Digital Currency”
Round Dollar Wallet Technologies, founded by Norman Chan Tak-lam, ex-CEO of Hong Kong Monetary Authority (HKMA), announced its new product.
Norman Chan set up the e-wallet firm in October last year, focusing on digital payment services to facilitate cross-border payments. The venture came as China accelerated the development of its digital yuan, or DCEP, launched by the People’s Bank of China.
The company announced the “Round Dollar”, pegged to a basket of three currencies — Renminbi, Japanese Yen and Hong Kong Dollar. Instead of a digital currency, the company described “Round Dollar” as “a new accounting and payment unit” for the e-wallet. Round Dollar will serve as “a new alternative for companies to manage foreign currency risks,” it said.
After setting up the RD Wallet application, corporate users can purchase Round Dollar from banks and other institutions. Fixing the transaction amount, the buyer then can pay the seller with Round Dollar directly via their RD wallets in cross-border transactions. This will help companies manage the foreign currency risks, according to Round Dollar.
Additionally, Round Dollar reveals its investors and backers: ZhongAn Digital Asset — owned by Hong Kong-listed ZhongAn Online, HashKey Holdings, Dragonfly Round, and YF Capital, a venture capital firm co-founded by Jack Ma.
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