Tether Fined $41 Million Over Misleading Claims That Stablecoins Were Fully Backed by US Dollars
One week after Bloomberg spilled the beans that Tether may not actually have the $69 billion it says it does, it appears that the Commodity Futures Trading Commission (CFTC) has come to the same conclusion.
On Friday, the CFTC revealed that it has fined Tether $41 million over making false claims that each of its stablecoins in circulation were “fully backed” by one US dollar. The regulatory body alleged that for at least the duration of mid 2016 to February 25, 2019, Tether “misrepresented to customers and the market” that it held US dollars in its accounts equivalent to the number of stablecoins, or USDTs, issued into circulation. Rather, Tether owned an equal amount of dollar reserves “for only 27.6% of the days in a 26-month sample time period.”
Moreover, the CFTC also found that Tether did not conduct routine, professional audits to indicate whether or not it held 100% of the reserves it said it did. In reality, Tether not only failed to audit its reserves at all, but even held unsecured receivables and non-fiat assets as part of those reserves, the agency explained. Tether has not admitted or denied any wrongdoing, but did argue that the CFTC’s allegations have been corrected when the company updated its terms of service in February 2019.
The CFTC also fined Bitfinex— an affiliate of Tether— $1.5 million over supposedly conducting illegal transactions on behalf of US investors and operating as an unregistered futures exchange.
Information for this briefing was found via the CFTC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
