Last Updated on 22/11/2021 by Sunaina
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Tether has agreed to pay $41 million to resolve charges brought by the US Commodity Futures Trading Commission (CFTC) that it made false or misleading claims while claiming that its stablecoins were completely backed by fiat currencies.
According to the CFTC, Tether misled clients and the cryptocurrency markets between June 2016 and February 2019 that it had “sufficient US dollar reserves” to back every token while, in reality, its reserves were not properly backed the majority of the time.
Furthermore, the CFTC stated that Tether failed to disclose that it included unsecured receivables and non-fiat assets as part of its reserves, falsely telling investors that it would conduct routine audits to show it maintained 100 percent of reserves at all times, despite the fact that its reserves were not audited.
“This case highlights the expectation of honesty and transparency in the rapidly growing and developing digital assets marketplace,” said interim CFTC chairman Rostin Behnam in a statement.
Tether was investigated by the New York Attorney General’s Office for allegations concerning its funding, and a meeting was held with the agency in February. It is barred from conducting business in New York under the terms of the settlement.
Tether asserted in a statement emailed to The Verge on Friday that the CFTC order “found no problems pertaining to Tether’s current operations,” adding that flaws in the agency’s order were remedied when Tether revised its terms of service in February 2019.
The CFTC also stated on Friday that Bitfinex, a cryptocurrency exchange linked with Tether, had been fined $1.5 million for engaging in “illegal, off-exchange retail commodities transactions in digital assets” with Americans in violation of the conditions of a 2016 CFTC order.
Tether remarked in a statement that the CFTC’s conclusions against Bitfinex “relate to the timing and implementation of its restriction on US consumers,” noting that the CFTC’s decision found no breaches after December 2018.