The U.S. Department of Justice is reportedly considering charges against executives at iFinex Inc., the company behind the stablecoin Tether, for alleged bank fraud.

Tether (USDT), the third-largest cryptocurrency by valuation, is used to trade other cryptocurrencies and has had a colorful history. As a stable coin pegged to the U.S. dollar, it’s meant to be backed by dollars. As revealed in March, it’s not, with only 3.87% of USDT backed by dollars and the rest backed by a combination of cash equivalents, short-term deposits and commercial paper.

The New York Attorney General’s Office had previously gone after iFinex over Tether in April 2019, resulting in an $18.5 million settlement in February. The potential Justice Department lawsuit is something new.

Bloomberg reported that the Tether iFinex investigation relates to alleged bank fraud. Federal prosecutors are said to be scrutinizing whether Tether concealed from banks that transactions were linked to cryptocurrency.

It’s arguably an odd claim. As with the New York investigation in relation to USDT’s dollar backing, which is something iFinex had previously claimed, there are grounds for concern. The DOJ, however, is allegedly going after Tether because, at some point earlier in its history, iFinex may not have disclosed that it was dealing with cryptocurrency to banks.

U.S. banks, at various points, have been anti-cryptocurrency. JP Morgan Chase Co., Bank of America Corp. and Citigroup Inc. announced in 2018 that they were banning cryptocurrency purchases using credit cards. JP Morgan then launched its own cryptocurrency a year later, complete with a variant of the Ethereum blockchain.

“Tether routinely has an open dialogue with law enforcement agencies, including the DOJ, as part of our commitment to cooperation and transparency,” iFinex said in a statement.

The Bloomberg report added that the Justice Department has sent letters to individuals alerting them that they are targets of the investigation. It’s claimed that those notices indicate the department may be close to bringing a case against iFinex.

The report comes after U.S. Treasury Secretary Janet Yellen, who claimed that most cryptocurrency is used for illicit financing, called for the regulation of stablecoins.

Yellen told the WSJ CEO Council Summit in May, “I think (for) cryptocurrencies we don’t really have an adequate framework to deal with the different issues that they pose from a regulatory perspective. There are issues around money laundering, Bank Secrecy Act, use of digital currencies for illicit payments, consumer protection and the like.”

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