(Bloomberg) — Tether will pay $41 million to settle a U.S. regulator’s allegations that it lied in claiming each of its stablecoins was backed by fiat currencies.
From at least June 2016 through February 2019, Tether misrepresented to customers and the cryptocurrency market that it maintained sufficient U.S. dollar reserves to back every token, the Commodity Futures Trading Commission said in a Friday statement. Since its 2014 launch, Tether had claimed that its coins were pegged to fiat currencies and “100% backed by corresponding” assets, the CFTC said.
“This case highlights the expectation of honesty and transparency in the rapidly growing and developing digital assets marketplace,” said acting CFTC Chairman Rostin Behnam.
Tether also failed to disclose that it held unsecured receivables and non-fiat assets as part of its reserves, and falsely told investors it would undergo routine, professional audits to demonstrate that it maintained “100% reserves at all times,” the regulator said. In fact, Tether reserves were not audited, the agency said.
The CFTC also announced that Bitfinex, a crypto exchange affiliated with Tether, was fined $1.5 million for permitting retail transactions by American residents.
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