Tether And Bitfinex Hit With $41M Fine For Lying About Dollar Reserves

Tether and Bitfinex were hit with a $41 million fine by the CFTC for lying about the dollar reserves as we are reading more today in our Tether news.

The Commodity Futures Trading Commission hit Tether and Bitfinex with a $41 million fine. The agency claimed that TEther made untrue statements about its fiat-backed reserves and therefore, its sister company also got fined. Tether is the company behind the world’s biggest stablecoin and today it was hit with a $41 million fine by the CFTC.

The regulatory body explained in a press release that Tether made untrue or misleading statements and omissions of the material fact in connection with the USDT stablecoin. Bitfinex also got hit with a $1.5 million fine for illegal retail commodity transactions in digital assets. Tether Limited is the company behind Tether and the thrid biggest by market cap. The digital asset is the most-traded crypto in terms of volume traded on an exchange and it is pegged 1:1 with the US dollar. This is supposed to make the value of the stablecoin more stable, as opposed to the value of crypto coins like BTC and ETH.

Tether is a controversial asset as it claims the coins are backed by real US dollars held in reserves but its critics say this isn’t true. The company previously was slow to release the audits and now the CFTC alleges that TEther made false claims about backing off the asset. Between 2016 and 2019, Tether’s coins were not fully backed by the US dollar the CFTC claimed:

“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.”

Tether had a good amount of fiat services in its accounts to back the tokens in circulation for 27.6% of the days in a 26-month time period from 2016 to 2018.
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Tether also used unregulated entities and third parties to hold the funds. Bitfinex undertook unlawful commodity transactions from 2016 to 2018 and let Americans buy and sell BTC and Tether without having to register with the regulator. The CFTC acting chairman Rostin Behna said:

 “The CFTC will continue to take decisive action to bring to light untrue or misleading statements that impact CFTC jurisdictional markets.”