On Friday, October 15, 2021, the U.S. Commodity Futures Trading Commission (CFTC) announced that it had ordered the company Tether Holdings Limited and Ifinex Inc., the parent company of Bitfinex, to pay fines totaling $42.5 million. The CFTC accuses Tether of “making false or misleading statements and omitting material facts in connection with the United States Dollar (USDT) stablecoin token.”
CFTC Issues Two Fines to Tether and Bitfinex, CFTC Expects ‘Honesty and Transparency in the Developing Digital Assets Marketplace’
The stablecoin issuer Tether and Ifinex have been charged by the U.S. Commodity Futures Trading Commission (CFTC) and the two firms have been ordered to pay $42.5 million. Tether is accused of “making false or misleading statements and omissions” with respect to the stablecoin the company issues.
The U.S. regulator also claims that the crypto exchange Bitfinex “engaged in illegal, off-exchange retail commodity transactions in digital assets with U.S persons on the Bitfinex trading platform and operated as a futures commission merchant (FCM) without registering as required.”
“This case highlights the expectations of honesty and transparency in the rapidly growing and developing digital asset market,” CFTC Acting Chairman Rostin Behnam said on Friday. “The CFTC will continue to take decisive action to bring to light untrue or misleading statements that impact CFTC jurisdictional markets.”
In the past, Tether and Bitfinex have had issues with the New York Attorney General’s Office (NYAG), but came to a settlement this year. At the time, New York Attorney General Letitia James declared in a statement:
Bitfinex and Tether recklessly and illegally covered up massive financial losses to maintain their program and protect their bottom line. Tether’s claims that its virtual currency was fully backed by US dollars at all times were a lie. These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system.
CFTC Acting Director of Enforcement Says Regulations Are Intended to “Promote Market Integrity and Protect US Customers”
Bitfinex and Tether finally settled with the NYAG in late February 2021, and the companies were fined $ 18.5 million. The acting director of CFTC enforcement, Vincent McGonagle, says the latest news concerning the CFTC’s fines against the two crypto companies shows the regulator is committed to promoting integrity.
“As today’s actions against Tether and Bitfinex demonstrated, the CFTC is committed to fulfilling its legal obligation to promote market integrity and protect US customers,” McGonagle said. in a press release. The CFTC Acting Director of Law Enforcement added:
The CFTC will use its strong anti-fraud enforcement authority over commodities, including digital assets, when necessary. The CFTC will also act to ensure that certain trading of digital assets on margin, leveraged or funded offered to US retail clients must take place on properly registered and regulated exchanges. Moreover, as the Bitfinex order reflects, the CFTC will take decisive action against those who choose to violate CFTC orders.
Meanwhile, crypto markets have been enthralled by rumors that a bitcoin exchange-traded fund (ETF) has been given the green light from regulators. So much so that crypto markets did not even flinch when the CFTC’s news about Tether and Bitfinex dropped on Friday afternoon.
In a concurring statement, the commissioner of the CFTC Dawn D. Stump said: “I agree with the findings of the Commission” regarding the fines imposed on Tether and Bitfinex. “The settlement with the Tether respondents finds that there were misrepresentations regarding the assets backing tether, specifically that the USDT tokens were backed 1-to-1 by US dollars. The evidence establishes that this assurance provided to attached clients was not 100% true, 100% of the time. When reviewing this record, it is clear to me that wrongdoing occurred, and that someone should be held accountable,” Stump added.
