Bitcoins Tether and crypto exchange Bitfinex will pay $42.5 million to settle civil charges from U.S Commodity Futures Trading Commission over allegedly making illegal statements and making misleading transactions. Firms doing business as Tether agreed to pay $41 million to resolve charges by the CFTC they made misleading claims about Tether's cryptocurrency, Tether told the CFTC in a statement on Friday.
According to the regulator, from June 2016 to late February 2019, Tether made misleading or untrue statements about whether it held enough U.S. dollar reserves to fully back up its U.S currency tether token.
In a separate order, firms doing business as Bitfinex agreed to be fined $1.5 million over charges their controls were not adequate to stop U.S. customers from unlawfully entering retail commodity transactions on the exchange. This violated US law and a 2016 settlement with Bitfinex over similar allegations, the CFTC said.
Neither Tether nor Bitfinex, which were controlled by the same parent company, admitted nor denied the findings. Tether challenged the CFTC's statements in a statement on its website, saying the agency's findings were that Tether's currency reserves were not all in cash in a money account held in Tether's name at all times, rather than that the tokens were not fully backed.
CFTC Commissioner Dawn Stump, a Republican, affirmed the agency's findings that the assurance that was used to tether customers was not 100% accurate, 100 per cent of the time and that wrongdoing occurred pursuant to a statement published alongside the CFTC orders.
However, Stump raised concerns that the decision - the first time the CFTC has applied commodity definition to a stablecoin - would sow confusion among cryptocurrency firms and investors.