Tether, the world’s largest stablecoin, and Bitfinex, the largest cryptocurrency exchange, has been fined $42.5 million by the Commodity Futures Trading Commission for several breaches (CFTC).
According to a statement released by the agency on Friday, tether made untrue or misleading representations and omissions of material information in connection with the U.S. dollar tether token (USDT) stablecoin.
Tether’s sibling company, Bitfinex, was fined $1.5 million for illegal, off-exchange retail commodities trades in digital assets.
Both companies have also been ordered to cease violating the CEA in the future (Commodity Exchange Act). Tether stablecoin (USDT) is the third most valuable cryptocurrency in terms of market capitalization. In terms of volume traded on exchanges, it is also the most traded cryptocurrency.
The CFTC has made allegations against a ‘controversial’ individual. Tether and Bitfinex are two cryptocurrency exchanges.
Tether, while being popular crypto and a stablecoin, is still a contentious asset. Although opponents have debunked this claim, tether claims that its currencies are backed by genuine U.S. dollars stored in reserves. On the other hand, the business published their audits, and the CFTC today charged the firm with making misleading statements regarding the asset’s support.
According to the CFTC, Tether’s currencies were not completely backed by U.S. dollars for most of the time between 2016 and 2019. According to the CTFC, Tether only has enough fiat reserves in its accounts to back the tokens in circulation for a few months between those dates.
The CTFC said that the Bitfinex exchange engaged in illegal commodities transactions from March 1, 2016, through at least December 31, 2018. Americans were allegedly able to purchase and sell Bitcoin and Tether on the exchange without registering with the CTFC. The regulator has stated that it would continue to pursue false comments that impact its jurisdictional markets.