CETF confirmed Tether and Bitfinex violations of the Commodity Exchange Act. And both of these two will have to pay a total fine of $42.5 million.
Since the long time, many players raised issues on the operations of the Tether firm. Recently we covered a report, where a Bloomberg report claimed that Tether has many commercial papers, which clearly shows how Tether issued huge debt for Chinese companies.
In The full case study against Tether & Bitfinex, Commodity Futures Trading Commission (CFTC) found that around 27.5% times Tether was not holding enough fiat currency to back the USDT supply in the market in between the time range of 2016 to 2018. Tether was only holding only a small amount of fiat money to back the USDT operations.
The CFTC agency also stated that Tether was not holding all the pegged funds in the fiat form. They holded a big amount of funds in non-fiat form.
CFTC also figured out that the allegations against the Bitfinex exchange true to facilitate ” illegal, off-exchange retail commodity transactions in digital assets with U.S persons” on its platform. While Bitfinex was not a licensed merchant to facilitate the transactions.
Dawn Stump, commissioner of CFTC, said that Tether tried to mislead people that it is fully regulated under CFTC but beside that its backed fund was not fully reserved in particular interval of times, so in this way Tether “provide users of stablecoins with a false sense of comfort”.
In response to this matter, Tether shared their point of view on this fine by CFTC. According to Tether, they will try to keep “maintained adequate reserves” always and also the settlement with the SEC is a part of the current situation of the firm to focus on the operations of the future.