Washington, D.C. – The Commodity Futures Trading Commission (CFTC) has levied a $42.5 million penalty against Tether and Bitfinex for deceptive practices and regulatory violations within the digital asset marketplace. The actions, announced today, target misleading claims about Tether’s stablecoin (USDT) reserves and Bitfinex’s unregistered operation as a futures commission merchant.
Tether Holdings Limited, along with its affiliated entities Tether Limited, Tether Operations Limited, and Tether International Limited, will pay a $41 million civil monetary penalty. The CFTC found that Tether falsely claimed its USDT stablecoin was fully backed by U.S. dollar and euro reserves from at least June 1, 2016, to February 25, 2019. 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. Tether also misrepresented that it underwent routine professional audits to verify its “100% reserves” claim.
In a separate order, the CFTC charged iFinex Inc., BFXNA Inc., and BFXWW Inc. (d/b/a Bitfinex) with operating an illegal, off-exchange retail commodity transaction platform for digital assets and acting as an unregistered futures commission merchant. Bitfinex will pay a $1.5 million penalty and is prohibited from further violations of the Commodity Exchange Act (CEA). The platform is now required to implement systems to prevent unlawful retail commodity transactions.
“This case highlights the expectation of honesty and transparency in the rapidly growing and developing digital assets marketplace,” stated Acting Chairman Rostin Behnam. “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, “The CFTC is committed to carrying out its statutory charge to promote market integrity and protect U.S. customers. The CFTC will use its strong anti-fraud enforcement authority over commodities, including digital assets, when necessary.”
The investigation revealed that Tether, since its launch in 2014, repeatedly asserted its stablecoin maintained a 1:1 peg to fiat currencies. The CFTC’s order details how these representations were often inaccurate, creating a misleading picture of the company’s financial stability and the backing of its digital token.
Source: CFTC.gov
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