Tether Fined $41 Million by CFTC for Misleading Claims on USDT

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The Commodities Futures Trading Commission (CFTC) has issued a civil charge order to cryptocurrency Tether and crypto exchange Bitfinex for illegal transactions and making misleading statements.

In a press release from the Commission, they will pay $42.5 million as charges for their offenses.

The regulator noted that between June 2016 and February 2019, Tether made untrue or misleading statements regarding its ability to provide settlements for all US dollar Tether tokens on its reserve. At the time, the cryptocurrency stated that it had enough reserve to pay all Tether holders. However, the regulator stated that such assurance is misleading.

In another order, the CFTC said Bitfinex did not provide enough control to prevent U.S customers from illegally getting involved in retail commodities transactions on the platform.

Tether has agreed to pay the $41 million penalties while crypto exchange Bitfinex will be paying a $1.5 million fine, according to the CFTC.

Tether Responds To CFTC Findings

Both Bitfinex and Tether are managed and controlled by the same company. In response to the charges, the company neither denied nor admitted the findings.

But on its website, Tether moved to challenge the regulator’s statement, stating that the findings were not that the tokens are not fully backed but that Tether’s dollar reserves are not in cash and the company’s bank account. Tether added that it’s the main goal of the company to protect US customers while promoting market integrity.

Tether also stated that it has always maintained adequate reserve and has never misrepresented the value of its reserve in any statement. The company added that the Commission’s findings on Bitfinex concern the implementation and timing of its ban on US customers. Additionally, the Order does not make any findings on violation after December 2018.

Tether Did Not Give Its Customers 100% Reserve Assurance

In response, Commissioner of CFTC, Dawn Stump, stated that Tether did not provide 100% assurance that all USDT tokens are backed by funds in Tether’s reserve.

He also admitted that the solution to the issue, when applied, may cause more confusion among investors and cryptocurrency firms.

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