On October 15, the CFTC handed crypto sister companies Tether and Bitfinex fines totaling $41 million and $1.5 million, respectively, due to violations of the Commodity Exchange Act (CEA) and an earlier CFTC order.
The regulator found that Tether, the company behind the eponymous stablecoin, had only enough legal reserves to support dollar-pegged assets 27.6% of the time during a 26-year period. A month under review between 2016 and 2018.
According to Cowen Telegraph, Tether broke the law by holding a portion of the reserves in non-cash financial instruments, as well as by mixing operating and reserve funds.
In a simultaneous action, the commodity futures watchdog has settled charges with Bitfinex for facilitating illegal OTC retail commodity transactions in digital assets with US persons on its platform , in addition to acting as a forward commission trader (FCM), without registering as required.
In a simultaneous statement, CFTC Commissioner Don Stump endorsed the measure while also expressing concerns that the settlement could provide stablecoin users a false sense of comfort. Because they may incorrectly conclude that the CFTC regulates stablecoins and supervises their issuers.
While the CFTC has applied a broad definition of a commodity to stablecoins in the present case, Stump has distanced the Commission from regulating this asset class and possessing insight Journal of the work of those who issue stablecoins.
Tether issued a rebuttal, insisting it maintains adequate reserves at all times. The company made its decision to settle clear by its willingness to resolve the matter in order to move forward and focus on the future.
