- Tether is facing fines of $ 41 million to settle allegations of misleading statements.
- Bitfinex was fined $ 1.5 million for facilitating retail transactions for US citizens.
- Tether has been under the scrutiny of financial regulators on stablecoin reserve claims for years.
Financial regulators have investigated Tether and Bitfinex for criminal investigation into bank fraud and misleading statements. Currently, over $ 62 million worth of Tether is in circulation, which is likely to impact the vast cryptocurrency market.
Tether and Bitfinex hit by CFTC fines; there may be an impact on the crypto market
US regulators have accused Tether of making false or misleading statements. The Commodity Futures Trading Commission (CFTC) imposed a penalty of $ 41 million on Tether and $ 1.5 million on Bitfinex.
Bitfinex has been fined for allowing US citizens to transact on its exchange. The CFTC announced the sanctions earlier today.
Tether has played a key role in the crypto ecosystem, and the US Department of Justice is focusing on stablecoin’s nascent activity following its launch in 2014. Federal prosecutors have investigated crypto-related transactions, and the banks were not aware of their nature.
The old investigations have remained confidential, according to sources close to the Ministry of Justice (DoJ). A criminal investigation is one of the key developments in regulators’ crackdown on cryptocurrencies.
Over $ 62 billion in Tether tokens are in circulation; supporters think he’s too big to fail. In a statement, Tether said:
Tether regularly maintains an open dialogue with law enforcement agencies, including the Department of Justice, as part of our commitment to cooperation and transparency.
In light of recent events, however, Tether faces a greater challenge, safeguarding the interests of the crypto community by not failing. Traders in fiat-crypto exchanges and peer-to-peer platforms exchange their fiat for stablecoins to gain access to the cryptocurrency ecosystem.
If Tether fails, the inflow of stablecoins to the exchanges could be compromised, triggering a drop in capital inflows to Bitcoin.
In their concurring statements, the CFTC was quoted:
The settlement with the Tether Respondents reveals that there were misrepresentations regarding the assets backing Tether, in particular that the USDT tokens were backed 1 to 1 by US dollars. The evidence establishes that this assurance given to attached clients was not true 100%, 100% of the time.
Tether officials are held accountable by the CFTC. In addition, the CFTC has applied a definition of commodities to stable coins. Regulators are concerned that enforcement measures may confuse their role in regulating cryptocurrencies and stablecoins.
The CFTC statement reads as follows:
In a recent speech, SEC Commissioner Hester Peirce asked an important question regarding the scrutiny of stablecoins by US regulators: Are we fighting for investors or for jurisdiction? This question comes to the fore in my mind when I consider these regulations.
Tether thinks that,
As Tether represented in the Order, he always maintained adequate reserves and never failed to meet a redemption request.
Tether suggested that the CFTC’s findings regarding Bitfinex relate to its activities before December 2018. The stablecoin issuer is focused on solving the problem and looking ahead.
The statement reads as follows:
We are grateful that the market has consistently demonstrated their confidence in Tether. We will continue to earn that trust and lead the industry in innovation and transparency.