Company behind Tether token fined $ 41 million by US regulators

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The company behind a digital token called Tether agreed to pay $ 41 million to settle fees that allegedly misled investors by claiming the token was fully secured at all times by US dollars and other fiat currencies.

The Commodity Futures Trading Commission said on Friday it accused Tether Holdings Limited of making false or misleading statements and omissions regarding its claims. Specifically, the US regulator has found that since the token’s launch in 2014, Tether Holdings has declared it to be a stable coin whose value is linked to fiat currency, including the US dollar and the euro.

A stablecoin is a digital currency backed by real world assets such as national currencies or other commodities. Unlike Bitcoin and other cryptocurrencies, stablecoins are designed not to fluctuate dramatically in value.

However, the CFTC has determined that at least from June 1, 2016 to February 25, 2019, Tether made a false statement to customers and to the market that it maintains sufficient reserves of US dollars to support each Tether token in circulation with the amount. equivalent of the corresponding fiat currency.

The agency also found that Tether had not disclosed that it included unsecured debt and non-fiduciary assets in its reserves, and that the company had falsely stated that it would undergo regular audits to prove it was maintaining the fiat currency reserves she needed to back up the Tether tokens.

In a statement, Tether, which is headquartered in Hong Kong and has an office in Santa Monica, Calif., Said the CFTC’s findings related to certain disclosures about the company’s reservations that were fully resolved in February 2019, when the company updated its terms of service.

When it comes to Tether Reserves, there is no evidence that Tether Tokens were not fully secured at all times, just that the Reserves weren’t all in cash and all in a bank account titled in Tethers’ name, at all. moment, the company said, noting that it has always kept sufficient reserves and has never failed to meet a redemption request.

Separately, the CFTC also ordered Bitfinex to pay a civil fine of $ 1.5 million after finding that the cryptocurrency trading platform made illegal over-the-counter commodity transactions involving digital assets. with US investors and operated as a futures trader without registering to do so.

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