Tether-WSJ Controversy Leads to $400M in Liquidations as Bitcoin Drops $3,000 in Minutes
Bitcoin and other cryptocurrencies experienced significant volatility on Friday night following a controversial report from the Wall Street Journal, which was quickly denied by Tether’s CEO. Nonetheless, the report had a damaging effect, causing over $400 million in liquidations for over-leveraged traders in just one day.
The report by CryptoPotato highlighted the Wall Street Journal’s claims that the US federal government was conducting an investigation into the company behind Tether, the world’s largest stablecoin, for potential violations of anti-money laundering regulations and sanctions. The report also suggested that prosecutors at the Manhattan US attorney’s office were looking into whether USDT was being used to bypass US rules and sanctions.
Tether CEO Paolo Ardoino promptly refuted the allegations made by the Wall Street Journal, stating that there was no indication of Tether being under investigation. He emphasized that Tether regularly collaborates with law enforcement officials to prevent the misuse of USDT by rogue nations, terrorists, and criminals.
Nonetheless, the news had an immediate impact on cryptocurrency prices. Bitcoin, which had been trading near $69,000, plummeted by over $3,000 to $65,500. Although it has since recovered some ground and is currently trading at nearly $67,000.
The market-wide effect caused by the news led to a total of $405 million in liquidations on a daily scale. Interestingly, altcoins were responsible for the majority of the liquidations, accounting for over $100 million, while Bitcoin and Ethereum trailed behind at $68 million and $65 million, respectively.
CoinGlass reported that nearly 150,000 over-leveraged traders suffered losses in the past day due to the market volatility caused by the Tether-WSJ controversy.