Home News CFTC slaps Tether and Bitfinex with a combined $42.5 million fine

CFTC slaps Tether and Bitfinex with a combined $42.5 million fine

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Tether and Bitfinex were fined $41 million and $1.5 million, respectively, by the Commodity Futures Trading Commission (CFTC) on Oct. 15, citing breaches of the Commodity Exchange Act (CEA) and a previous CFTC ruling.

Tether, the company behind the namesake stablecoin, only had adequate cash assets to support the dollar-pegged currency for 27.6% of the time during the 26-month period under examination between 2016 and 2018, according to the regulator. Tether also broke the law by keeping a portion of its reserves in non-fiat financial instruments. As well, mixing operating and reserve money, according to the agency.

Bitfinex faced charges of enabling “illegal, off-exchange retail commodity transactions in digital assets with US people” on its platform. As well as acting “as a futures commission merchant, or FCM. Without registering as required”, according to the commodities futures watchdog.

Commissioner Dawn Stump, in a concurring statement, endorsed the move while also expressing worries that the settlement might “give consumers of stablecoins with a false feeling of security,” leading them to believe that the CFTC monitors and supervises stablecoin issuers.

Definition of “commodity”

Stump distanced the CFTC from regulating stablecoins and having “daily insight into the activities of individuals who issue” stablecoins. Despite the fact that the CFTC has used a broad definition of “commodity” to stablecoins in this instance.

Tether responded with a statement in which it stated that it “always kept enough reserves.” The decision to settle was based on the firm’s desire to “resolve this case in order to move ahead and focus on the future,” according to the firm.

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