On October 15, The Commodity Futures Trading Commission, or CFTC, penalized sister cryptocurrency companies Tether and Bitfinex with fines totaling $ 41 million and $ 1.5 million, respectively, citing violations of the Commodity Exchange Act. , or CEA, and from a prior order from the CFTC.
The regulator found that Tether, the company behind an altcoin of the same name, has only held enough fiat reserves to back the dollar-pegged asset 27.6% of the time during the 26-month period under review between 2016 and 2018. The agency also stated that Tether violated the law by maintaining part of the reserves in non-fiduciary financial instruments, as well as by combining operating and reserve funds.
In a simultaneous action, the commodity futures watchdog added charges to Bitfinex for facilitating “illegal off-exchange retail commodity transactions in digital assets with US persons.” on its platform, in addition to operating “As a Futures Commission Trader, or FCM, without signing up as needed.”
In a concurring statement, CFTC Commissioner Dawn Stump endorsed the action and also expressed concern that the deal could “provide altcoin users with a false sense of comfort.” as they could falsely conclude that the CFTC regulates altcoins and supervises their issuers.
While the CFTC has applied a broad definition of “commodity” to altcoins in the present case, Stump distanced the Commission from regulating this asset class and having “a daily view of the business of those who issue” altcoins.
Tether issued a rebuttal statement, insisting that it “maintained adequate reservations” at all times. The firm explained its decision to come to terms with its willingness to “resolve this matter in order to move forward and focus on the future.”
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