Tether Appoints New AML Chief, Mints 100 Million New USDT Tokens
Tether isn’t backing down in their efforts to prove legal compliance and legitimacy. In their latest move, Tether Limited has hired a former Bank of Montreal anti-money laundering (AML) quality control manager, Leonardo Real, as their Chief Compliance Officer. Coincidentally, $100 million USD in Tether was sent to Bitfinex today, the first major transfer of funds from Tether to Bitfinex since $250 million was sent late last month.
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Law Enforcement Closing In
The move comes amidst multiple recent developments in the world of law enforcement, with increased attempts to combat cryptocurrency-related criminal activity, including money laundering. The Internal Revenue Service (IRS) recently announced the formation of an international task force called “J5”, established to tackle perceived illicit activities in the borderless cryptocurrency industry.
The U.S. Secret Service delivered a lengthy statement last month to Congress outlining the need for increased vigilance in the fight against cryptocurrency-related crime. Both agencies specifically mentioned money laundering as being among their major concerns.
On top of this, President Trump yesterday signed an executive order establishing a “Task Force on Market Integrity and Consumer Fraud”, with “digital currency fraud” listed among the top issues to be dealt with. This comes after the Trump administration said late last year they were closely watching cryptocurrencies, without providing any details on potential future actions.
Real on the Issue of Transparency
In a statement, Leonardo Real alluded to the heightened scrutiny on the crypto space, outlining the importance of transparency and emphasizing the company’s intention to comply with regulations:
“Joining Tether as CCO is an an incredibly exciting move for me personally, and I am particularly impressed by the motivation, dedication, and talent of the Tether team. I look forward to helping showcase Tether’s commitment to transparency and regulatory compliance within the blockchain and cryptocurrency space. As a longtime advocate of blockchain technology and the integration of cryptocurrencies into the mainstream, I am looking forward to putting my experience in AML and regulatory compliance in traditional financial institutions to use, to ensure that the Tether project can continue its work disrupting traditional industries.”
Jean-Louis van der Velde, CEO of Tether, also commented on some of the reasons for Real’s hiring, making it clear that the company seeks to be nothing short of a fully trusted and compliant business entity:
“We are particularly excited to announce this key hire at a seminal point in the life of the blockchain and cryptocurrency sector. As the industry matures, all actors within the space shall be expected to meet a higher standard of industry best practices. As Tether continues to work to realise our vision of total transparency and unparallelled security within the cryptocurrency market, we will always endeavour to set the gold standard in regulatory compliance.”
Van der Velde was recently touted as a candidate to become Bitfinex’s Chief Strategy Officer (CSO) following the resignation of Phil Potter.
Tether Will Do Anything for Love… But It Won’t Do That (Submit to an Audit)
The hiring follows other recent moves by Tether to shore up goodwill in the eyes of the public and federal regulators alike. Back in June, they hired a law firm founded by a former FBI director to review their finances. The firm, Freeh Sporkin & Sullivan LLP, confirmed that $2.5 billion sat in the company’s bank accounts on June 1st, but did not perform a complete audit. Tether’s general counsel, Stuart Hoegner, was reported as having said, “The bottom line is an audit cannot be obtained.”
Tether had previously worked with accounting firm Friedman LLP in 2017. The firm performed a limited analysis of Tether Limited’s dealings, though this too was not a complete audit. Ties with Friedman LLP were prematurely severed, and months later it was reported that the firm, along with Bitfinex and Tether, had been subpoenaed by the Commodity Futures Trading Commission (CFTC) in December 2017.
Bitfinex and Tether were recently denied a Freedom of Information Act (FOIA) request to unseal documents related to the subpoena, with the CFTC stating that the “disclosure of that material could reasonably be expected to interfere with the conduct of the Commission’s law enforcement activities.”
Speculation Remains Rife As Continued Investigations Into Fraud Loom
A study published in June leveled serious accusations that USDT — as had long been suspected among many crypto community insiders — was used to manipulate the price of bitcoin during its 2017 bull run. The U.S. Department of Justice (DOJ) has launched a probe into bitcoin price manipulation, though no entities were specifically mentioned as subjects of the probe. The results of the investigation, as well as those of the CFTC’s, are yet to be released.
Bitfinex, which shares the same ownership as Tether Limited, has also made recent moves to shore up compliance concerns. Back in May, they similarly hired a new Chief Compliance Officer, Peter Warrack. The exchange described Warrack as someone who had held “senior officer roles within the Police Service of Northern Ireland, and senior positions within the Royal Bank of Canada (RBC) and the Bank of Montreal’s Financial Intelligence Units.”
Last May, the world’s 4th largest exchange by volume also began demanding tax information from select customers in an effort to become tax complaint with the government of the British Virgin Islands. This drew the ire of much of the crypto community, prompting calls to boycott Bitfinex entirely.
Speculation will continue to swirl around Tether and Bitfinex, despite superficially positive appointments and announcements. Bitcoin was built on a foundation of trustlessness and decentralization, neither of which Tether Limited is a disciple of. Tether and Bitfinex, in the eyes of many observers, represent a model of money supply from which cryptocurrency was designed to offer a departure.
Have your say. Do you suspect Bitfinex and Tether have something to hide? What might be the ramifications if the worst of the community’s suspicions are proven true?
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