Tether, the leading stablecoin issuer, has been ordered to pay a $41 million civil monetary penalty by the Commodity Futures Trading Commission as part of a settlement deal, according to a press release issued on Oct. 15.
The company was accused of violating the Commodity Exchange Act (CEA) by making misleading statements about the USDT stablecoin being backed one-to-one by U.S. dollars.
Despite claiming that the stablecoin was fully pegged to the value of the greenback, the order says that Tether had sufficient reserves less than a third of the 26-month period (from 2016 to 2018). Tether also did not perform professional audits during the aforementioned time sample:
The order further finds that Tether failed to disclose that it included unsecured receivables and non-fiat assets in its reserves, and that Tether falsely represented that it would undergo routine, professional audits to demonstrate that it maintained “100% reserves at all times” even though Tether reserves were not audited.
