The U.S. Commodity Futures Trading Commission has slapped Tether with US$42.5 million in penalties, saying it made "untrue" and "misleading" statements and "omissions of material fact" in its management of the USDT.
Bloomberg BusinessWeek recently published an exposé on the company, detailing how it rose to become so powerful, the people pulling the strings, and where the money is hidden, among other details.
Cryptocurrency exchange Bitfinex went offline on Thursday for over two hours, halting trading on its platform and leaving traders in the dark.
Reginald Fowler stands accused of providing shadow banking services through his firm Crypto Capital among multiple other charges. The firm has links to both iFinex, the parent company of Bitfinex and Tether, and Colombian drug cartels.
The number of laypeople pouring their money into ‘crypto’ is growing exponentially, lured in by fantasies of overnight wealth and the false idea that BTC’s 300% gains over the past year can only continue.
Regulators have waited too long to act on so-called stablecoins, to the point where exposure to schemes like that being run using Tether has infected the entire digital asset industry—and even beyond it.
The NYAG statement is highly critical of Bitfinex and Tether, accusing them of “recklessly and unlawfully [covering up] massive financial losses” and “illegally trading virtual currencies in the state of New York.”
The loan was taken to cover for the loss of $850 million in co-mingled client and corporate funds caused by entrusting its liquidity to a Panamanian company called Crypto Capital, according to NYAG.
The outcome of the case could have a huge impact on digital asset markets, with Tether regarded as the asset that backs up much of BTC's (and other popular assets) price.
Whenever the curtain is pulled back on the operations of Tether, the representations made by its executives change dramatically.
With a large portion of the "money" flowing into digital asset markets recently coming from USDT, any regulatory action against it could have a large negative impact, Jon Southurst writes.
Reginald Fowler has been embroiled in a legal battle for months over his involvement in the Crypto Capital/Bitfinex case.
