Tether was fined $ 41 million for lying about dollar reserves
2 min readTether, the world’s largest stablecoin, USDT, was fined $ 41 million by the commodity futures trading commission yesterday.
A $ 41 million fine for lying about dollar reserves
The regulator states in the report that Tether made “false or misleading statements and failed to disclose material facts regarding the USDT stablecoin”.
Tether’s sister company, Bitfinex, a cryptocurrency exchange, was also fined $ 1.5 million yesterday for “illegal over-the-counter retail commodity transactions in digital assets.”
Tether Limited is the company behind Tether, the third largest cryptocurrency by market capitalization. A digital asset is by far the most traded cryptocurrency in terms of volume traded on exchanges. It is a stablecoin, which means that it is pegged 1: 1 to the US dollar. This is supposed to stabilize its value, in contrast to the value of cryptocurrencies such as BTC or Ethereum, which regularly experience dramatic price fluctuations.
However, Tether is a controversial asset: Tether claims that his coins are covered by real US dollars held in reserves – although his critics claim that this is not true. The company has previously issued two of its audits.
The CFTC claims that Tether provided false information about the asset’s reserves. From 1 June 2016 to 25 February 2019, Tether coins were not fully covered by US dollars for most of the time.
“Tether did not disclose that it included unsecured receivables and non-Fiat assets in its provisions. In addition, Tether has falsely stated that it will undergo routine, professional audits to demonstrate that it still maintains a ‘100% reserve’ and that Tether’s reserves have never been audited by an independent entity, “the CFTC said in a report.
Tether held only sufficient reserves of fiat currencies in its accounts to ensure that tokens were in circulation for only 27.6% of the days for the 26 months from 2016 to 2018, the CTFC said. Tether also used “unregulated entities and certain third parties to hold funds,” the authority added.
And Bitfinex, the CTFC said, carried out illegal commodity transactions from March 1, 2016 to December 31, 2018. The exchange allegedly allowed Americans to buy and sell BTC and USD without registering with the CTFC.
Acting CTFC President Rostin Behnam said: “The CFTC will continue to take action and take action to expose false or misleading statements that have an impact on the CFTC’s jurisdictional markets.”
