TL;DR Breakdown
- Bitfinex exchange, Tether slammed $42M fine by CFTC.
- CFTC alleges Tether made untrue decarations about USDT.
- Tether despite being the third largest token remains a controversial crypto.
The firm behind the largest stablecoin globally, Tether, alongside Bitfinex exchange, has been slapped with a $42.5 million fine for a series of violations by the Commodity Futures Trading Commission (CFTC).
In a release on Friday by the regulator, they claimed that Tether made “untrue or misleading statements and omissions of material fact in connection with the U.S. dollar tether token (USDT) stablecoin.”
Bitfinex exchange, a sister firm to Tether, was hit with a $1.5 million fine for “illegal, off-exchange retail commodity transactions in digital assets.”
Both firms have also been ordered to cease and desist from any further violations of the CEA (Commodity Exchange Act). Tether stablecoin (USDT) is the third biggest cryptocurrency by market cap. It is also the most traded cryptocurrency in terms of volume traded on exchanges.
Allegations CFTC laid against ‘controversial’ Tether, Bitfinex exchange
Despite being a top crypto and a stablecoin, Tether remains a controversial asset. Tether claims its coins are backed by real U.S. dollars held in reserves, with critics debunking that claim. The firm, however, released its audits, and the CFTC today alleges that the firm made false claims about the backing of the asset.
According to CFTC, from 2016 to 2019, Tether’s coins were not fully backed by U.S. dollars for most of the time, the CFTC claims. Tether only held sufficient fiat reserves in its accounts to back the tokens in circulation for only few months between that time frame the CTFC alleged.
For Bitfinex exchange, the CTFC said, undertook unlawful commodity transactions from March 1, 2016, through at least December 31, 2018. The exchange allegedly let Americans buy and sell Bitcoin and Tether without having registered with the CTFC. The regulator has vowed to continue to hunt down misleading statements that impact its jurisdictional markets.
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