Law and Legislation

Tether & Bitfinex Fined For $42.5 Mln By CFTC For Making Misleading Claims.

The order “simultaneously filing and resolving charges against Tether (USDT),” the issuer of the crypto industry’s largest stablecoin, was issued by the US regulator.

On accusations that the USDT stablecoin was not fully supported at all times and that Bitfinex breached a previous agency order, the Commodity Futures Trading Commission (CFTC) fined Bitfinex and Tether more than $42 million.

On Friday, the federal commodities regulator reached an agreement with the crypto businesses’ siblings, prohibiting both from “any additional breaches of the Commodity Exchange Act (CEA) and CFTC rules.”

Tether’s stable coin was only completely backed by reserves for one-quarter of the time between 2016 and 2018, according to a CFTC news release. Tether’s reserve funds were also mixed up with the company’s corporate money, and reserves were stored in non-cash items.

“Tether kept part of the Tether Reserves in bank accounts other than the Tether Bank Accounts at different periods.” Tether indicates that it has not failed to meet a redemption request for tether tokens and that it has included receivables and non-fiat assets among its counted reserves at times,” according to an order attached to the release.

Similar results were disclosed by the New York Attorney General’s office in a Tether and Bitfinex inquiry that was resolved earlier this year.

“The decision further finds that, rather than keeping all USDT token reserves in US dollars as stated, Tether relied on unregulated companies and third-parties to retain money comprising the reserves,” according to the press release. Tether and Bitfinex representatives did not immediately respond to requests for comment. The business disputed the accusations in a statement released immediately after the CFTC announcement.

“There is no conclusion that the Tether tokens were not completely supported at all times – only that the reserves were not all in cash and all in a bank account titled in Tether’s name at all times.” Tether has always kept enough reserves and has never failed to meet a redemption request, as it stated in the Order,” Tether wrote. In a parallel move, the CFTC said it settled commodities allegations against Bitfinex.

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