CFTC Fines Stablecoin Issuers Tether and Crypto Exchange Bitfinex $42.5 Million –

On Friday, October 15, 2021, the U.S. Commodity Futures Trading Commission (CFTC) announced that it has ordered Tether Holdings Limited and Ifinex Inc., the parent company of Bitfinex, to pay a total of $42.5 million in fines. The CFTC accuses Tether of “making untrue or misleading statements and omitting material facts relating to the U.S. dollar Tether token ( USDT ) stablecoin.”

CFTC Imposes Two Fines on Tether and Bitfinex, CFTC Expects “Honesty and Transparency in the Evolving Digital Assets Marketplace”

Stablecoin issuer Tether and Ifinex were charged by the US Commodity Futures Trading Commission (CFTC) and the two firms were ordered to pay $42.5 million. Tether is accused of “making untrue or misleading statements and omissions” regarding the stablecoins issued by the company.

The US regulator also claims that crypto exchange Bitfinex “conducted illegal, over-the-counter commodity transactions in digital assets with US persons on the Bitfinex trading platform and operated as a Futures Commission Merchant (FCM) without registering as required.”

“This case underscores the expectation of honesty and transparency in the rapidly growing and evolving digital assets market,” CFTC Acting Chairman Rostin Behnam said Friday. “The CFTC will continue to take robust action to expose untrue or misleading statements that impact markets under CFTC jurisdiction.”

In the past, Tether and Bitfinex have had problems with the New York Attorney General's Office (NYAG), but reached an agreement this year. At the time, New York Attorney General Letitia James said in a statement a statement:

Bitfinex and Tether have recklessly and unlawfully covered up massive financial losses to keep their systems running and protect their bottom lines. Tether’s claim that its virtual currency was fully backed by US dollars at all times was a lie. These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and companies operating in the darkest corners of the financial system.

The CFTC's acting director of enforcement says the regulation is intended to "promote market integrity and protect U.S. customers."

Bitfinex and Tether finally reached an agreement with the NYAG in late February 2021, and the firms were required to have one $18.5 million fine. CFTC Acting Director of Enforcement Vincent McGonagle says the latest news on the CFTC's fines against the two crypto companies shows the regulator is committed to promoting integrity.

“As today’s actions against Tether and Bitfinex demonstrated, the CFTC is committed to fulfilling its legal mandate to promote market integrity and protect U.S. customers,” McGonagle said in a press release. The CFTC Acting Director of Enforcement further added:

The CFTC will use its strong enforcement authority to combat fraud in commodities, including digital assets, when necessary. The CFTC will also require that certain margined, leveraged or financed digital asset trading transactions offered to retail customers in the United States must occur on properly registered and regulated exchanges. Additionally, as reflected in the Bitfinex order, the CFTC will take decisive action against those who choose to violate CFTC orders.

In the meantime, Crypto markets were excited by rumors that a Bitcoin exchange traded fund (ETF) was getting the green light from regulators. So much so that crypto markets didn't even flinch when the CFTC news about Tether and Bitfinex dropped on Friday afternoon.

In one consistent statement, CFTC Commissioner Dawn D. Stump said: “I agree with the Commission’s findings” regarding the fines against Tether and Bitfinex. “The comparison with the Tether respondents notes that there were misrepresentations regarding the assets backing Tether, particularly that the USDT Tokens were backed 1-to-1 by US dollars. The evidence shows that this assurance given to Tether customers was not 100% true. In reviewing this record, it is clear to me that misconduct occurred and that someone should be held accountable,” Stump added.

What do you think of the CFTC's $42.5 million fine on Tether and Bitfinex? Let us know your thoughts on this topic in the comments below.

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