Cryptocurrency prices have reversed early gains and are broadly lower during U.S. afternoon hours on Friday following a Wall Street Journal report that the U.S. is probing stablecoin issuer Tether for violations of sanctions and anti-money laundering rules.

Stablecoins are a type of cryptocurrency whose value is pegged to another asset, typically the U.S. dollar. With a market cap in excess of $120 billion, tether (USDT) is by far the most widely used stablecoin.

Earlier in the session, crypto prices had been on the rise, with bitcoin (BTC) nearing the $69,000 level and perhaps readying for a late-day or weekend challenge of topping $70,000 for the first time in three months. In the minutes following the news on Tether, bitcoin had tumbled to as low $66,500, down nearly 2% over the past 24 hours, before modestly bouncing back to $66,800. The broader market gauge CoinDesk 20 Index was lower by 2.3% over the same time frame.

Taking to X shortly following the story, Tether's Chief Executive Officer Paolo Ardoino said the WSJ is "regurgitating old noise." There is no indication, said Ardoino, that Tether is under investigation.

The stablecoin firm subsequently released a statement dismissing the WSJ article.

UPDATE (Oct. 28, 06:08 UTC): Corrects Paolo Ardoino's title in fourth para to Chief Executive Officer. Adds statement from Tether.

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Stephen Alpher

Stephen is CoinDesk's managing editor for Markets. He previously served as managing editor at Seeking Alpha. A native of suburban Washington, D.C., Stephen went to the University of Pennsylvania's Wharton School, majoring in finance. He holds BTC above CoinDesk’s disclosure threshold of $1,000.