The Tether Saga of Account Deactivations, Regulatory Scrutiny, and the Path to T...

The company behind the industry-leading stablecoin, Tether, has directly addressed the apprehensions concerning its operational procedures. These concerns surfaced from documents released by the New York Attorney General (NYAG), suggesting that Tether had deactivated roughly 29 accounts affiliated with eminent figures in the cryptocurrency domain in 2021.

Tether Takes a Stand Amidst Operational Concerns

Contrary to popular assumptions, the motivations for these account terminations vary greatly, and they were not explicitly outlined in the released documents. Tether’s management has shown reluctance to comment on the specifics of individual relationships, maintaining decorum of privacy.

Nevertheless, they emphasized that all the individuals affected by these terminations had been subject to stringent compliance checks during onboarding. In addition, these individuals faced continuous monitoring in line with the firm’s adherence to its rigorous compliance policies.

The Spotlight on Deactivated Accounts

The list of deactivated accounts included illustrious names in the digital currency sector, such as MoonPay, BlockFi, CMS Holdings, and Galois Capital.

While the NYAG’s investigation wrapped up as early as February 2021, newly emerging documents suggest that the probe extended till around June of the same year. All user codes within these documents have been redacted to maintain the parties’ privacy.

Tether and Bitfinex under the NYAG Microscope

The NYAG assembled this dossier while rigorously scrutinizing Tether and its affiliate, Bitfinex, on the allegations of misappropriating an enormous $850 million. iFinex, the parent company of both Tether and Bitfinex, had requested a 30-day extension to submit the essential financial documents before the initially set deadline.

The parties involved in this investigation reached an agreement eventually. As per the settlement, Tether consented to pay a penalty of $18.5 million and discontinue trading activities in New York.

Tether’s Transparency Under Debate

Following this settlement, numerous media outlets and the renowned cryptocurrency platform Coinbase invoked the Freedom of Information Act, demanding the NYAG to make Tether’s initial quarterly report public. However, Tether opposed this request, reasoning that it had an obligation to protect its client’s confidential information from any potential misuse by entities.

Despite Tether’s dissent, the NYAG permitted media outlets to access these documents. This disclosure unveiled the deactivation of many company accounts, further fueling the curiosity and concern around Tether’s operational decision-making.

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