Tether Addresses Account Deactivation Controversy, Implements Enhanced Compliance Checks

Tether Addresses Account Deactivation Controversy, Implements Enhanced Compliance Checks

Tether, the company behind market-leading stablecoin Tether USDT, has addressed concerns regarding its operational decisions.

According to documents released by the New York Attorney General (NYAG), Tether reportedly deactivated approximately 29 accounts belonging to prominent cryptocurrency players in 2021. It appears that most individuals on the list had their accounts terminated for different reasons.

While the reasons for the account terminations were not disclosed, Tether responded by indicating that it is unwilling to comment on individual relationships. However, the company clarified that all individuals had undergone rigorous compliance checks during onboarding, as well as ongoing monitoring, as mandated by Tether’s compliance policies.

Among the deactivated accounts were:

• MoonPay
• BlockFi
• CMS Holdings
• Galois Capital

Although the NYAG investigation concluded as early as February 2021, it has come to light that certain documents in the investigation extend until around June of the same year. User codes within these documents have already been redacted.

The NYAG gathered these documents while investigating Tether and its sister company Bitfinex for misappropriating $850 million in funds. During this time, iFinex — the parent company of both entities — requested a 30-day extension to produce the critical financial documents before the expiration of the previously scheduled date.

Ultimately, the involved parties reached a settlement in which Tether agreed to pay a penalty of $18.5 million and halt trading activities in New York. Subsequently, media outlets and Coinbase requested the NYAG to publicly disclose Tether’s initial quarterly report under the Freedom of Information Act. However, Tether objected to this request, citing the need to safeguard its customers’ confidential information from potential exploitation by malicious individuals.

Despite Tether’s objection, the NYAG allowed media outlets access to the documents, revealing the deactivation of numerous company accounts.