Tether Puts the Past Behind Them by Paying $41M to CFTC for Not Having All of Its Reserves in Cash
The US Commodity Futures Trading Commission (CFTC) announced that it has settled charges against Tether for “making untrue or misleading statements and omissions of material fact in connection with the U.S. dollar tether token (USDT) stablecoin.”
Tether will pay a $41 million penalty for what the company says is “putting the past behind us so we can move forward and focus on the future.”
CFTC said, while Tether claimed USDT is fully backed by fiat assets, it found that the company failed to disclose that the reserves backing also included unsecured receivables and non-fiat assets in its reserves between June 1, 2016, to February 25, 2019.
“There is no finding that tether tokens were not fully backed at all times — simply that the reserves were not all in cash and all in a bank account titled in Tether’s name, at all times,” said Tether in a statement, noting that not only it always maintained adequate reserves but it also has never failed to satisfy a redemption request.
The agency also settled charges against the cryptocurrency exchange Bitfinex for being engaged in illegal retail commodity transactions in crypto assets with US persons and operating as a futures commission merchant (FCM) without registering as required.
Bitfinex will be paying $1.5 million in penalty and is required by the agency to implement and maintain additional systems reasonably designed to prevent unlawful retail commodity transactions.
Tether said the CFTC’s Order makes no finding of a violation after December 2018.
Acting Director of Enforcement Vincent McGonagle said in a statement that the CFTC will continue to use its anti-fraud enforcement authority over digital assets, when necessary. Additionally, it will act to ensure that margined and leveraged digital asset trading offered to retail US customers must occur on properly registered and regulated exchanges, he added.