WASHINGTON, D.C. – Jan Ludwick, a principal at Tether Holdings Limited, faces penalties after the Commodity Futures Trading Commission (CFTC) issued an order on October 15, 2021, simultaneously filing and settling charges against Tether Holdings Limited and affiliated entities for making false and misleading statements regarding the reserves backing the USDT stablecoin. The CFTC alleges that Tether misrepresented the extent to which the tether token was backed by fiat currency.
The CFTC order requires Tether to pay a $41 million civil monetary penalty and cease any further violations of the Commodity Exchange Act (CEA) and CFTC regulations. The agency found that from at least June 1, 2016, to February 25, 2019, Tether falsely claimed that USDT was fully backed by U.S. dollars and euros held in reserve. In reality, Tether’s reserves were often not “fully-backed,” and the company failed to disclose the inclusion of unsecured receivables and non-fiat assets within those reserves.
In a parallel action, the CFTC also settled charges against iFinex Inc., BFXNA Inc., and BFXWW Inc. (d/b/a Bitfinex) for operating the Bitfinex cryptocurrency trading platform. The CFTC found that Bitfinex engaged in illegal, off-exchange retail commodity transactions in digital assets with U.S. persons and operated as an unregistered futures commission merchant (FCM). Bitfinex has been ordered to pay a $1.5 million penalty and implement systems to prevent unlawful transactions.
Acting CFTC Chairman Rostin Behnam emphasized the importance of honesty and transparency in the digital asset marketplace. “This case highlights the expectation of honesty and transparency in the rapidly growing and developing digital assets marketplace,” Behnam stated. “The CFTC will continue to take decisive action to bring to light untrue or misleading statements that impact CFTC jurisdictional markets.”
Acting Director of Enforcement Vincent McGonagle added that the CFTC is committed to protecting U.S. customers and ensuring market integrity. “The CFTC will use its strong anti-fraud enforcement authority over commodities, including digital assets, when necessary,” McGonagle said. The actions against Tether and Bitfinex signal the CFTC’s increased scrutiny of the rapidly evolving cryptocurrency landscape.
Source: CFTC.gov
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