Tether Fined $41M over 'Misleading Statements'
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Tether Fined $41M over 'Misleading Statements'

According to the Commodity Futures Trading Commission, USDT was not fully backed by U.S. dollars across a period from June 2016 to June 2019.

Tether Fined $41M over 'Misleading Statements'

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Tether has been fined $41 million for making “untrue or misleading statements” concerning its stablecoin.

According to the Commodity Futures Trading Commission, USDT was not fully backed by U.S. dollars across a period from June 2016 to June 2019.

Tether is a stablecoin that’s designed to be worth $1 — and at the time, the issuer said every USDT in circulation had “the equivalent amount of corresponding fiat currency” that was “safely deposited in its accounts.”

The CFTC alleges that the company failed to disclose that unsecured receivables and other non-fiat assets were in these reserves — and falsely claimed that routine, professional audits were going to take place.

Data from the regulator suggests that Tether only had sufficient fiat reserves to back USDT for just 27.6% of the time over a period spanning 26 months.

The CFTC’s acting chairman, Rostin Behnam, said:

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

Tether Under Scrutiny

Although the fine won’t reflect well on Tether, it could be argued that it amounts to a slap on the wrist given that more than 69 billion USDT are currently in circulation.

Despite the CFTC’s case focusing on the period between 2016 and 2019, questions surrounding the funds that Tether holds in reserve have not gone away.

Earlier this month, Bloomberg Businessweek released a scathing report that asked the question: “Tether is supposed to be backed by real U.S. dollars. So where’s the money?” 

Zeke Faux’s report went on to claim that Treasury Secretary Janet Yellen summoned the heads of the SEC and the Federal Reserve to discuss Tether, amid fears it had “gotten so large that it threatened to put the U.S. financial system at risk.” 

Tether reacted furiously to the in-depth feature and claimed that it was based on “innuendo and misinformation.”