CFTC Fines Tether For Lying & Bitfinex For ‘Illegal’ Transactions

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Key Takeaways:

  • CFTC Fines Tether For Lying and now Tether to pay a $41 million penalty to settle accusations by a US regulator that it misrepresented the fact that its digital tokens were completely backed by US dollars.
  • The CFTC also ordered Bitfinex to pay a civil penalty of $1.5m, finding that it had carried out illegal retail commodity transactions.
Cftc Fines Tether For Lying
CFTC Fines Tether For Lying

The US Commodity Futures Trading Commission (CFTC) has issued an order charging Tether Holdings Limited, Tether Limited, Tether Operations Limited, and Tether International Limited (d/b/a Tether) with making false or misleading statements from at least June 2016 to February 2019 and omissions of material fact in connection with the most popular stablecoin, tether (USDT). The tether must pay a civil monetary penalty of USD 41 million as a result of the ruling. Stablecoins serve as a bridge between the crypto and traditional financial sectors, acting as crypto-native dollars. They are meant to have a set price and be supported one-for-one at all times, and they allow traders to more quickly jump in and out of cryptocurrencies like bitcoin.

As per the order, Tether also failed to execute routine and professional audits during the relevant time period. Tether hired an accounting firm to conduct a review of Tether reserves on a date chosen in advance and Bitfinex transferred over $382 million to Tether’s bank account prior to the review.

 Bitfinex’s penalty For ‘Illegal’ Transactions

According to Bloomber, in conjunction with their operation of the Bitfinex crypto trading platform, the CFTC also issued a separate order concurrently filing and resolving charges against iFinex Inc., BFXNA Inc., and BFXWW Inc.

(d/b/a Bitfinex) in relation with its cryptocurrency trading platform Bitfinex. The judgment alleges that Bitfinex engaged in illegal off-exchange retail commodities transactions in digital assets with US individuals on the trading platform from at least March 2016 to December 2018 and failed to register as a futures commission merchant (FCM). Bitfinex must pay a civil monetary penalty of USD 1.5 million as a result of the ruling.

By December 31, 2021, Bitfinex must fulfil certain obligations, including implementing and maintaining systems and procedures that reasonably prevent non-ECP U.S. persons from engaging in retail commodity transactions.

This case throws light upon the expectation of honesty and transparency in the rapidly growing and developing digital assets marketplace,” said Acting chairman @CFTCbehnam. “The CFTC will continue to take decisive action to bring to light untrue or misleading statements that impact CFTC jurisdictional markets.”

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Prabhat Tiwari
Prabhat Tiwari

I am someone who loves swimming in the ocean of DeFi and believes the disruptive technology, i.e., Bitcoin will change a lot of things and not just our financial system.

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