US regulators fined Tether with $41 mn
By MYBRANDBOOK
The digital token company, Tether has agreed to pay $41 million in order to settle charges that the company misled investors by claiming the token was fully backed at all times by U.S. dollars and other fiat currencies.
As per the Commodity Futures Trading Commission (CFTC), it fined Tether Holdings with making untrue or misleading statements and omissions in relation to its claims. The U.S. regulator has found out that since its token launch in 2014, Tether Holdings represented that it was a “stablecoin” with its value pegged to fiat currency, including U.S. dollars and euros.
A stablecoin is a digital currency backed by real-world assets such as national currencies or other commodities. Unlike Bitcoin and other cryptocurrencies, stablecoins are designed to not fluctuate wildly in value.
CFTC has determined that at least from June 1, 2016 through Feb. 25, 2019, Tether misrepresented to customers and the market that it maintained sufficient U.S. dollar reserves to back every Tether token in circulation with the equivalent amount of “corresponding fiat currency.”
Also, the agency found that Tether failed to disclose that it included unsecured receivables and non-fiat assets in its reserves. Moreover, the company falsely represented it would undergo regular audits to prove it was maintaining the fiat currency reserves it needed to back Tether tokens.
Tether in a statement said that he CFTC’s findings pertained to certain disclosures about the company’s reserves that were “fully resolved” in February 2019, when the company updated its terms of service.
“As to the Tether reserves, there is no finding that Tether tokens were not fully backed at all times - simply that the reserves were not all in cash and all in a bank account titled in Tether’s name, at all times,” the company said, noting that it has “always maintained adequate reserves and has never failed to satisfy a redemption request.”
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