The CFTC has ordered Tether and Bitfinex to pay $42.5 million in fines

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The Commodity Futures Trading Commission (CFTC) has ordered Tether, the stablecoin issuer and blockchain technology business behind $USDT, to pay $41 million in civil monetary penalties. A $1.5 million punishment was also imposed on iFinex, the parent firm of the Bitfinex exchange.

As part of a settlement agreement, the two corporations will pay these fines. In addition, tether has been accused of breaking the Commodity Exchange Act (CEA) by making false statements about USDT being backed by fiat currency (USD) on a one-to-one basis. On the other hand, Bitfinex, a subsidiary of iFinex, will pay fines for conducting off-exchange retail commodity transactions for digital assets with U.S. residents on its trading platform.

Tether has failed to perform due diligence and required disclosures for its claims on a one-to-one backing for the USDT stablecoin, according to the CFTC‘s official press statement.

“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 stated.

According to the CFTC, Tether lacked sufficient reserves for less than a third of the 26 months during which it actively linked USDT to the U.S. dollar between 2016 and 2018. Bitfinex, on the other hand, was found to have “force-liquidated some customer positions and acted as the counterparty to certain transactions,” in violation of a previous order imposed in 2016.

Tether stated in reaction to the order stating that it would completely comply, closing and settling the case.

“This inquiry arose during a markedly different time in our ecosystem, and focused on the same types of challenges that many in our industry faced at the time. As many companies around the world do, Tether agreed to resolve this matter in order to move forward and focus on the future.We are grateful that the market has consistently demonstrated its trust and confidence in Tether.” Tether stated.

Paolo Arduino, the Chief Technology Officer of Tether and Bitfinex, expressed his relief on Twitter that the case is now resolved.

Key claims in a class-action lawsuit filed against Tether and Bitfinex were rejected in late September of this year. However, the two companies were accused of breaking specific provisions of the Racketeer Influenced and Corrupt Organizations Act, according to the lawsuit (RICO). In February of this year, the two companies paid $18.5 million compensation to the New York Attorney General’s Office as part of a settlement agreement.

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