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BREAKING: Tether Slapped with $41 Million Fine by CFTC

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Fri, 10/15/2021 - 15:13
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Alex Dovbnya
The CFTC has ordered Tether and Bitfinex to pay hefty fines
BREAKING: Tether Slapped with $41 Million Fine by CFTC
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Tether, the leading stablecoin issuer, has been ordered to pay a $41 million civil monetary penalty by the Commodity Futures Trading Commission as part of a settlement deal, according to a press release issued on Oct. 15.

The company was accused of violating the Commodity Exchange Act (CEA) by making misleading statements about the USDT stablecoin being backed one-to-one by U.S. dollars.

Despite claiming that the stablecoin was fully pegged to the value of the greenback, the order says that Tether had sufficient reserves less than a third of the 26-month period (from 2016 to 2018). Tether also did not perform professional audits during the aforementioned time sample:

The order further finds that Tether failed to disclose that it included unsecured receivables and non-fiat assets in its reserves, and that Tether falsely represented that it would undergo routine, professional audits to demonstrate that it maintained “100% reserves at all times” even though Tether reserves were not audited.

The CFTC also simultaneously slapped iFinex, the parent company of the Bitfinex exchange, with a $1.5 million fine for performing off-exchange retail commodity transactions.

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 Acting Director of Enforcement Vincent McGonagle says that these actions were meant to promote market integrity:

As demonstrated by today’s actions against Tether and Bitfinex, the CFTC is committed to carrying out its statutory charge to promote market integrity and protect U.S. customers.

Tether and Bitfinex CTO Paolo Ardoino sounded upbeat in his tweet, claiming that the companies can finally put the multi-year investigation behind them.

In its official statement, Tether says that the CFTC has found no issues with the company's current operations.

The CFTC's Order found no issues relating to Tether’s current operations. In fact, the Order related to certain disclosures about the reserves from more than two and a half years ago. As the Order recognizes, these issues were fully resolved when the terms of service were updated in February 2019.

This February, Tether also reached a $18.5 million settlement with New York Attorney General Letitia James.

In late September, it also scored a significant legal win in a trillion-dollar market manipulation suit.

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets, can be contacted at alex.dovbnya@u.today.