The Commodity Futures Trading Commission (CFTC) has fined stablecoin issuer Tether and its sister company Bitfinex $ 42.5 million (£ 30.92 million) for violating commodity regulations.
A press release released this news on October 15, noting that the CFTC held Tether liable for making false or misleading claims and omissions of material fact regarding the endorsement of Tether (USDT / USD).
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According to the press release, the federal commodities watchdog imposed a $ 41 million (£ 29.83 million) monetary fine on Tether and warned the company to avoid further violating the Commodity Exchange Act (CEA). ) and CFTC regulations. With the fine and the warning, the regulator settled its case with Tether.
In a separate order, the CFTC accused Bitfinex of engaging in illegal off-exchange crypto-based retail commodity transactions with US residents in addition, the regulator alleged that Bitfinex acted as an unregistered Futures Commission trader. (FCM) and violated a previous CFTC order issued on June 2, 2016.
To settle the case with Bitfinex, the CFTC ordered the company to pay a fine of 1.5 million dollars (1.09 million pounds) and warned the company not to violate CEA rules again. In addition to this, the commission directed Bitfinex to implement and maintain systems that would help prevent illicit retail commodity transactions.
Tether says he has always kept adequate reserves
Commenting on the deal with Tether and Bitfinex, CFTC Acting Chairman Rostin Behnam said:
This case highlights the expectation of honesty and transparency in the rapidly growing and developing digital asset market. The CFTC will continue to take decisive action to expose false or misleading statements that affect the jurisdictional markets of the CFTC.
In its case against Tether, the CFTC noted that USDT was only backed for about 27.6% of the time between 2016 and 2018. In addition to this, the regulator said the company did not have all USDT reserves in USDT represented and was instead reliant on on unregulated organizations and third parties to hold the funds.
The CFTC further noted that Tether combined the reserve funds with Bitfinex client and operating funds. In addition, the stablecoin issuer also held USDT reserves in non-fiat financial products.
Following the CFTC press release, Tether issued a statement, saying that the regulator has no findings indicating that USDT tokens were not fully backed at all times, only that the reserves were not all in fiats. Tether further noted that it has always maintained adequate bookings and has never failed to fulfill any customer’s redemption request.
This news comes after Tether and Bitfinex settled similar charges with the New York Attorney General’s (NYAG) office earlier this year. The deal caused the companies to pay a $ 18.5 million (£ 13.46 million) fine and stop trading with New York residents.
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