The United States Commodity Futures Trading Commission (CFTC) has fined blockchain-based stablecoin issuer, Tether Holdings Limited, and its sister firm, Bitfinex, a combined sum of $42.5 million for violating the Commodity Exchange Act (CEA).
According to the press release shared by the commission, Tether was slammed $41 million over its claims that its associated stablecoin, the USDT was fully backed by the US Dollar, and the Bitfinex fine came in at $1.5 million based on claims that the trading platform allowed Americans access its platform and for operating as a Futures Commission Merchant (FCM) without being duly registered as required when compared to its peers including Bakkt.
“As demonstrated by today’s actions against Tether and Bitfinex, the CFTC is committed to carrying out its statutory charge to promote market integrity and protect U.S. customers,” said Acting Director of Enforcement Vincent McGonagle. “The CFTC will use its strong anti-fraud enforcement authority over commodities, including digital assets, when necessary. The CFTC will also act to ensure that certain margined, leveraged, or financed digital asset trading offered to retail U.S. customers must occur on properly registered and regulated exchanges. Moreover, as the Bitfinex order reflects, the CFTC will take decisive action against those who choose to violate CFTC orders.”
The settlement and fine issued by the CFTC according to a concurrent statement issued by CFTC Commissioner Dawn Stump may spell confusion amongst the broader digital currency industry as to the role of the commission in regulating stablecoins and its issuers. The commissioner said the CFTC “do not regulate stablecoins and we do not have daily insight into the businesses of those who issue such.”
Tether Clearing Outstanding Regulatory Hurdles First with NYAG, Now CFTC
The ranking of Tether as the largest stablecoin with over $68.5 billion market cap did not come without its hurdles. The company has protracted legal cases with several regulators, and it is gradually clearing its name in order to focus on its business growth, according to a recent statement it issued in the recent CFTC settlement.
Besides the CFTC’s latest settlement, the company also inked an $18.5 million settlement with the New York Attorney General’s office to end the probe on the firm earlier in the year. Despite these broad regulatory settlements, the firm has often maintained that it is not guilty of any of the accusations per the claim its stablecoin is not fully backed with USD.
The settlements are huge for Tether, as the legal hurdles have largely pierced the trust many have for USDT, a move that has fueled the growth of alternative stablecoins including the USD Coin, and Binance USD amongst others.