Tether fined for lying about fiat

tether fined for lying about fiat

US government, represented by the state of New York, and USDT of Tether, put an end to the doubts and accusations that weighed on the company. It is, therefore, according to her, a positive signal. Indeed, from this point of view, the company is not accused of anything except having misinformed its customers. And since the conditions of use have been updated, there are no more problems on the horizon.

“As far as Tether’s reserves are concerned, there is no finding that Tether tokens were not fully guaranteed. Simply that the reserves were not all in cash and all in a bank account titled in Tether’s name.” “As Tether represented in the Order, it has always maintained adequate reserves and has never failed to meet a redemption request.”

The CFTC’s investigation “came at a distinctly different time in our ecosystem,” according to Tether.

Tether fined $41 million for lying about fiat currency backing

Both are owned by the same parent company, iFinex.

In a statement, Tether noted the allegations focused on activities that occurred before February 2019, when its terms of service were updated. Bitfinex stopped serving U.S. citizens in December 2018, the statement said.

“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,” the statement said. “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.”

In February, the New York Attorney General’s Office fined Tether and Bitfinex $18.5 million and banned the companies from operating in the state for allegedly covering up $850 million in losses.

Tether, the company behind the popular stablecoin USDT Tether was recently fined a record $41 million. While this is not much more than a speeding ticket, the symbolism is strong.Tether USDT Sentenced To Pay $41 Million! A First

The CFTC – Commodity Futures Trading Commission – has put an end to a story that has been dragging on for several years. Between June 2016 and February 2019, Tether was suspected of deliberately lying to its customers.
Indeed, the stablecoin was supposed to have one dollar in reserve for one USDT issued.

This allegation was challenged by the US commission. The latter had suspected the company for a long time. Between June 2016 and February 2019, Tether took the floor many times to reassure investors and prevent a market crash, which was then largely supported by the USDT.

But Stump added she was concerned that the settlement might cause confusion among investors, noting that the CFTC “does not regulate stablecoins, and we do not have daily insight into the businesses” involved with stablecoins. Stump questioned whether “the actions of the CFTC in entering into this settlement with the Tether respondents create a false sense of security for those investing in stablecoins?”


The Tether controversy, explained

The CFTC also announced Friday that Bitfinex, a cryptocurrency exchange affiliated with Tether, has been fined $1.5 million for “illegal, off-exchange retail commodity transactions in digital assets” with Americans, in violation of the terms of a 2016 order from the CFTC.

In a statement, Tether said the CFTC’s findings regarding Bitfinex “relate to the timing and implementation of its ban on U.S.

Until at least 2018, Tether manually kept tabs on its reserve levels, a process that wasn’t updated in real time, the CFTC said. Tether didn’t admit or deny the CFTC’s allegations.

“Tether agreed to resolve this matter in order to move forward and focus on the future,” the company said in a statement posted on its website. The CFTC also announced that Bitfinex, a crypto exchange affiliated with Tether, was fined $1.5 million for permitting retail transactions by American residents.

The case follows a February settlement with New York Attorney General Letitia James, who accused Bitfinex and several Tether affiliates of hiding losses and lying that each token was supported by one U.S.
dollar. The companies agreed to pay a $18.5 million fine without admitting or denying her claims. The U.S.

As part of the settlement, Bitfinex must comply with certain undertakings by December 31, 2021, “including implementing, as necessary, and maintaining systems and procedures reasonably designed to prevent” most U.S. citizens from engaging in retail commodity transactions.

“This case highlights the expectation of honesty and transparency in the rapidly growing and developing digital assets marketplace,” said Acting CFTC Chairman Rostin Behnam in the press release. “The CFTC will continue to take decisive action to bring to light untrue or misleading statements that impact CFTC jurisdictional markets.”

Tether is incorporated under several names in the British Virgin Islands and Hong Kong, while Bitfinex is incorporated in the British Virgin Islands.

From at least 2016 to 2019, Tether claimed it had sufficient U.S. dollar reserves to back every Tether stablecoin in circulation when, in fact, “Tether reserves were not ‘fully-backed’ the majority of the time,” the CFTC said Friday in a press release. Tether was instead at times backed by “unsecured receivables and non-fiat assets in its reserves,” the agency said.

In addition, 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 alleged.

The CFTC also fined Bitfinex, a cryptocurrency exchange, $1.5 million for allowing U.S. users to trade on its platform from at least 2016-18 in violation of the Commodity Exchange Act and CFTC rules.

Under the terms of that settlement, Tether is prohibited from doing business in New York state.

Tether said in a statement emailed to The Verge on Friday that the CFTC order “found no issues relating to Tether’s current operations,” adding that issues in the agency’s order were resolved when Tether updated its terms of service in February 2019.

“As to the Tether reserves, 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,” Tether’s statement continues.

But many traders have long been skeptical that Tether genuinely had the money backing the coins that it claimed. More recently, the Treasury Department and other federal agencies have been alarmed by the stablecoin’s dramatic growth. There are now Tethers worth about $69 billion in circulation, prompting concerns that crypto-market disruptions could trigger chaotic investor fire sales that threaten the financial system.

In its enforcement action, the CFTC said Tether failed to disclose that it held unsecured receivables and non-fiat assets as part of its reserves, and falsely told investors it would undergo routine, professional audits to demonstrate that it maintained “100% reserves at all times.” In fact, Tether reserves weren’t audited, the agency said.

The company was looking to shake off the false rumors and announcements from the mainstream press that regularly condemned it by calling the stablecoin business model a large-scale fraud.

These kinds of statements, investigations, and articles were the object of hatred from Tether’s executives. In particular, recently, when the CEO of Tether simply deleted his Twitter account and attacked the Bloomberg newspaper. Shortly afterward, a new investigation was published in the magazine, again questioning the supposed reserves backing the USDT.

The investigation spoke of a whole series of dubious and dishonest practices, from the simplest lie to the use of dubious or prohibited assets.

These statements have upset Jean-Louis van der Velde, the CEO of Tether, to the point that he deleted his Twitter account.

Leave a Reply

Your email address will not be published.