Tether stablecoin has responded to a Wall Street Journal report detailing alleged shady dealings by it and Bitfinex to open bank accounts. Specifically, Tether accused the WSJ of “stale allegations” of false documents for bank accounts.
Tether stablecoin and the conflict with the WSJ
The company behind the stablecoin Tether dismissed a Wall Street Journal report in which it claimed to have ties to entities that forged documents and used shell companies to maintain access to the banking system.
On 3 March, the WSJ reported on leaked documents and emails that allegedly revealed that entities linked to Tether and its sister cryptocurrency exchange Bitfinex forged invoices and sales transactions and hid behind third parties to open bank accounts they otherwise would not have been able to open.
In a statement on 3 March, Tether called the report’s findings “outdated allegations from long ago” and “completely inaccurate and misleading,” adding:
“Bitfinex and Tether have world-class compliance programs and adhere to applicable legal requirements on anti-money laundering, customer awareness and terrorist financing.”
The company went on to say that it is a proud partner of law enforcement and regularly and voluntarily assists authorities in the United States and abroad.
Tether and Bitfinex Chief Technology Officer Paolo Ardoino tweeted on 3 March that the report contained “misinformation and inaccuracies” and implied that WSJ reporters were clowns. Specifically, it read:
I’m at the PlanB anniversary in #lugano
So much energy and people excited to talk about #Bitcoin
While I was on on stage I heard some clown honks, pretty sure was WSJ.
As always ton of misinformation and inaccuracies. Poor guys, must be difficult be them but need better media.— Paolo Ardoino
(@paoloardoino) March 3, 2023
What does the WSJ report state about Tether stablecoin and Bitfinex?
The WSJ article outlines, through its review of leaked emails and documents, Tether and Bitfinex’s apparent relationships to stay in touch with banks and other financial institutions that, if cut off, would be an existential threat to their business, according to a lawsuit filed by the pair against Wells Fargo bank.
Specifically, one of the leaked emails suggested that the company’s China-based brokers were attempting to circumvent the banking system by providing false invoices and sales contracts for each deposit and withdrawal.
In addition, there were also allegations in the report that Tether and Bitfinex were using various means to evade controls that would restrict them from financial institutions and had ties to a company that allegedly laundered money for a US-designated terrorist organization, among others.
Meanwhile, a person familiar with the matter told the WSJ that Tether was being investigated by the Justice Department in an investigation led by the US Attorney’s Office for the Southern District of New York. However, the nature of the investigation could not be determined.
Tether has faced multiple allegations of wrongdoing in recent months and recently had to downplay a separate WSJ report in early February that said four men controlled about 86% of the company as of 2018.
Similarly, it had to fight what it called “FUD” (fear, uncertainty and doubt) from a WSJ report last December regarding its secured loans and later pledged to stop borrowing funds from its reserves.
Tether’s ownership structure under investigation
Only four men controlled 86% of the stablecoin issuer Tether Holdings Limited as of 2018, according to documents obtained by the Wall Street Journal in connection with the investigation by US authorities.
Investigations by the New York Attorney General’s Office and the Commodity Futures Trading Commission into Tether Holdings in 2021 revealed its previously unknown ownership structure.
The company is the issuer of Tether, the world’s largest stablecoin with $68 billion in circulation, based on CoinMarketCap data.
According to the documents, Tether was built by the joint efforts of former plastic surgeon Giancarlo Devasini and former child actor and cryptocurrency entrepreneur Brock Pierce.
In September 2014, Tether Holdings was incorporated in the British Virgin Islands. Four years later, Pierce had left the company and Devasini owned about 43% of Tether.
Devasini also helped build the cryptocurrency exchange Bitfinex, for which he is currently the chief financial officer. Bitfinex CEO Jean-Louis van Der Velde and chief adviser Stuart Hoegner each owned about 15% of Tether in 2018, according to the documents.
Tether’s fourth largest shareholder in 2018 was a dual national known as Christopher Harborne in the United Kingdom and Chakrit Sakunkrit in Thailand, who owned 13%.
Through their own holdings and another related company, the four men controlled about 86% of Tether, the report said. Again, Tether’s chief technology officer, Paolo Ardoino, tweeted that the Journal piece was a “strawman article” that would boost the company’s growth:
The more clown articles the more tether grows. People understand that Tether is standing for freedom and inclusion. This is upsetting MSM.
Eventually holepunch will break media as well.— Paolo Ardoino
