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Tether Settles CFTC Charges for $42.5 Million

The U.S. Commodity Futures Trading Commission (CFTC) has slapped Tether with US$42.5 million in penalties, saying it made “untrue” and “misleading” statements and “omissions of material fact” in its management of the USDT stablecoin over several years.

At the heart of the case were Tether management’s public claims that each “tether” digital asset unit was backed by one unit of its corresponding fiat currency (mostly USD, but also EUR and others). The companies had maintained that balance just 26% of the time between 2016 and 2018, the CFTC found.

Tether had also regularly shuffled reserve funds between unregulated partner entities, the Bitfinex exchange and other third parties, and “backed” its tokens with a mixture of fiat currencies and some decidedly unstable reserves including unsecured receivables, loans and other digital assets. Despite early promises to audit its holdings the companies had never done so satisfactorily, and at least 29 of the arrangements it made with other parties “were not documented through any agreement or contract.”

Read the source article at CoinGeek

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