The CFTC has ordered Tether and Bitfinex to pay hefty fines
Tether, the leading stablecoin issuer, has been ordered to pay a $41 million civil monetary penalty by The Commodity Futures Trading Commission as part of a settlement deal, according to a press release issued on Oct. 15.
The company was accused of violating the Commodity Exchange Act (CEA) by making misleading statements about the USDT stablecoin being backed one-to-one by US dollars.
Despite claiming that the stablecoin was fully pegged to the value of the greenback, the order says that Tether had sufficient reserves less than a third of the 26-month period (from 2016 to 2018). Tether didn’t perform professional audits during the above-mentioned time sample.
The CFTC also fined simultaneously slapped iFinex, the parent company of the Bitfinex exchange, with a $1.5 million fine for performing off-exchange retail commodity transactions.
Acting Director of Enforcement Vincent McGonagle says that these actions are meant to promote market integrity:
As demonstrated by today’s actions against Tether and Bitfinex, the CFTC is committed to carrying out its statutory charge to promote market integrity and protect U.S. customers.
Tether and Bitfinex CTO Paolo Ardoino sounded upbeat in his tweet, claiming that the companies can finally put the multi-year-long investigation behind them.
Thanks! Finally we were able to put all this behind us!
It’s a good day 💪💪💪🦁🦁🦁#tether official response here:https://t.co/cnaUKBkpkk https://t.co/n7rkyRFzmB
— Paolo Ardoino (@paoloardoino) October 15, 2021
In its official statement, Tether says that the CFTC has found no issues with the company’s current operations.
The CFTC’s Order found no issues relating to Tether’s current operations. In fact, the Order related to certain disclosures about the reserves from more than two and a half years ago. As the Order recognizes, these issues were fully resolved when the terms of service were updated in February 2019.
This February, Tether also reached an $18.5 million settlement with New York Attorney General Letitia James.
In late September, it also scored a significant legal win in a trillion-dollar market manipulation suit.