Tether Ltd., the issuer of tether cryptocurrency stablecoins, has agreed to pay a $41 million fine for allegedly lying in claiming that its tokens were fully backed by fiat currencies.
“The Commodity Futures Trading Commission Friday issued an order settling charges against Tether … for making untrue or misleading statements and omissions in connection with the U.S. dollar tether token stablecoin,” the CFTC said.
Separately, The CFTC issued settled charges against Tether’s affiliated exchange Bitfinex for a $1.5 million fine.
The CFTC claims 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 without registering as required.”
“As demonstrated by today’s actions against Tether and Bitfinex, the CFTC is committed to carrying out its statutory charge to promote market integrity and protect U.S. customers,” said Acting Director of Enforcement Vincent McGonagle.
Tether calls its tether token a stablecoin, with its value pegged to fiat currencies and 100% backed by corresponding fiat assets, including U.S. dollars and euros, the CFTC said.
But, “Tether misrepresented to customers and the market that Tether maintained sufficient U.S. dollar reserves to back every [token] in circulation with the ‘equivalent amount of corresponding fiat currency’ held by Tether,” the CFTC said.
“In fact Tether reserves were not fully-backed the majority of the time,” the CFTC said. “Tether failed to disclose that it included unsecured receivables and non-fiat assets in its reserves.”
In a statement, the company said "Tether agreed to resolve this matter in order to move forward and focus on the future."