USDT Crypto Developer Troubled, Fined IDR 578 Billion

Pengembang kripto USDT didenda CFTC (Market Exclusive)

JAKARTA – Surprising news came from the stablecoin crypto developer USD Tether (USDT). The Commodity Futures Trading Commission (CFTC) recently fined USDT crypto developers US$41 million or IDR 578 billion.

The CFTC has sanctioned entities behind USDT including Tether Holdings Limited, Tether Operations Limited, and Tether International Limited for being charged with making “untrue or misleading material statements and omissions” regarding USDT.

As is well known, stable coins like USDT have a value that refers to the US dollar. Tether claims that USDT itself is fully backed by fiats like the dollar and euro.

The regulator has investigated Tether for 26 months from 2016 to 2018. The regulator managed to reveal that Tether only had reserves to support USDT of 27.6 percent on the day of the inspection.

“In fact, Tether backups are not 'fully supported' most of the time. The order further finds that Tether failed to disclose that it included unsecured receivables and non-fiat assets in its reserves," the CFTC said.

"Tether was found guilty of admitting to conducting regular and professional audits to demonstrate that they could maintain '100 percent reserves at all times, even though Tether reserves are not audited."

In addition, the CFTC also revealed that Tether also put its reserve funds into the operational and consumer funds of the Bitfinex crypto exchange.

“The order also found that, instead of holding all USDT token reserves in US dollars as represented, Tether relied on unregulated entities and certain third parties to hold funds comprising the reserves; reserve funds combined with Bitfinex's operational and customer funds; and holding reserves in non-fiat financial products.”

The statement from the CFTC investigation also found “the combined assets of Tether and Bitfinex include funds held by third parties, including at least 29 arrangements not documented through any agreement or contract, and that Tether transferred Tether reserve funds to Bitfinex, including when Bitfinex needed assistance. to respond to the 'liquidity crisis,'” as quoted from The Daily Hodl, October 16, 2021.