- Tether has said that it wants to “focus on the future” after settling with the CFTC for $41 million
- The stablecoin issuer did not mention the “civil monetary penalty” in its press release
- Doubts will still persist over the backing of the massive stablecoin issuer’s USDT backing
Tether has said it wants to “move forwards” and “focus on the future” after settling with the U.S. Commodity Futures Trading Commission (CFTC) last week, but this may be easier said than done. Even though Tether admitted no wrongdoing, as was the case with their battle with the New York Attorney General (NYAG), the fact that it once again ended in a multi-million dollar settlement, added to the fact that it provably lied about the backing of its USDT tokens between 2016 and 2019, leaves a stain on its reputation that will be very hard to shift.
$41 Million “Civil Monetary Penalty Paid”
Tether and the CFTC jointly announced that they had agreed to a settlement on Friday, with the USDT issuer agreeing to pay what the CFTC called “a civil monetary penalty of $41 million” in relation to accusations that it claimed its reserves were fully backed by U.S. dollars up to February 2019.
The CFTC had argued that from “at least June 1, 2016 to February 25, 2019” Tether said that its reserved were backed by U.S. dollars, when in fact they were backed by a mix of U.S. dollars under their control, U.S. dollars in banks not under their name, and the same raft of commercial papers still accounting for the vast proportion of their backing today.
Tether didn’t mention the financial penalty anywhere in its press release, but the company’s lawyer Stuart Hoegner still complained that calling it a fine was a misrepresentation:
You assume correctly.
— Stuart Hoegner (@bitcoinlawyer) October 16, 2021
If this was so, why didn’t Tether mention it in their announcement and frame it in the ‘correct’ light? The fact they skipped over the handing over of any money to settle the case makes it seem like they won the case, when in fact they paid $41 million to make it go away – exactly as iFinex did with the NYAG case.
Tether’s Reputation Permanently Damaged
Whatever the semantics over the fine, the fact is that Tether (in a roundabout way) admitted to false representations during the 2016-2019 period at a time when Tether doubts were at fever pitch. Hoegner and Tether can wrap these up however they like, but the fact is that Tether lied to the cryptocurrency-buying public, with the company and its parent iFinex paying nearly $60 million to settle such cases rather than fight them.
These settlements have both been painted as victories for Tether, but the company’s well publicized misrepresentations, plus the unease with which many received their first transparency update, shows that it will take a long time before the crypto community can begin to really Tether.