Business

Tether paying $ 41 million to claim that stablecoin is fully dollar-backed

Tether, the world’s largest issuer of stablecoin, will pay a $ 41 million penalty to resolve U.S. regulators’ allegations that digital tokens have been falsely stated to be fully dollar-backed. I agreed.

Friday’s Commodity Futures Trading Commission Tether The digital token is fixed in fiat currencies such as the dollar — misunderstanding that there is enough dollar reserves to back up each stablecoin in circulation, at least from June 2016 to February 2019. I made an inviting remark.

Proceedings against the company. Half of the entire stablecoin universeIs the latest regulatory challenge to the crypto sector as US authorities have increased scrutiny of this ballooning industry.

Stablecoin acts as the native dollar of cryptocurrencies and acts as a bridge between cryptocurrencies and the traditional financial world.Make it easier for traders to get in and out Cryptocurrency It includes Bitcoin, has a fixed price, and is always backed up on a one-to-one basis.

Tether has issued more than $ 69 billion in stablecoin as demand surged, and critics have repeatedly questioned whether its reserves are fully backed up.

By CFTC order, Tether has enough flat reserves in its account to fully back up the tokens in circulation for only 27.6% of the days from September 2016 to November 2018. I found out.

The Commission also ordered cryptocurrency exchange Bitfinex to pay a civil penalty of $ 1.5 million and was found to have traded illegal retail goods from at least March 2016 to December 2018. The CFTC also said it failed to register as a “future committee merchant”, “a type of futures broker.

“The proceedings highlight expectations for integrity and transparency in the rapidly growing and evolving digital asset market,” said Rossin Behnam, acting chair of the CFTC.

Tether settled the proceedings in accordance with the order without acknowledging or denying liability. In the statement, “I didn’t find that the tether tokens weren’t always fully backed up. Simply, the reserves aren’t all in cash, they’re always in the bank account titled Tether. about it. . .[Tether]We always have sufficient reserves and have never failed to meet our redemption demands. “

He added that since December 2018, there have been no allegations of breach related to Bitfinex, which the owner also controls Tether.

The CFTC order found that Tether relies on an unregulated third-party entity to hold funds, including reserves. Regulatory orders also found that Tether had transferred reserves to Bitfinex, including when the exchange was experiencing what the chief financial officer described as a “liquidity crisis.”

The Commission said at one point in September 2017 that Bitfinex had sent $ 382 million to a newly opened Tether Bank account prior to an independent review of the stablecoin issuer’s reserves. Said.

The two groups have previously agreed $ 18.5 million settlement The Attorney General of New York has accused customers of fooling customers over reserves after suffering a serious loss of money when a payment processor’s account was frozen.

New scrutiny from global banks and market regulators that stablecoin growth could cause transmission in the credit market if token operators are forced to release reserves for any reason Attracted.

Stablecoin “acts like a poker chip in a casino,” said Gary Gensler, chairman of the Securities and Exchange Commission, who called the crypto sector “Wild West.”

Weekly newsletter

Sign up for our weekly newsletter for the latest news and insights on FinTech from FT’s correspondent network around the world. #fintechFT

Sign up here with just one click

Tether paying $ 41 million to claim that stablecoin is fully dollar-backed

Source link Tether paying $ 41 million to claim that stablecoin is fully dollar-backed

Back to top button