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Tether Fined $41M for Lying About Reserves

bloomberg.com

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Re: Tether Fined $41M for Lying About Reserves

#21

Post by wmf »

_3u10 wrote: post #18
tdeck wrote: post #4

I don't understand why this is something they can settle rather than something that gets them completely shut down.

The SEC is in the business of protecting investors not destroying peoples savings over a few inaccuracies. Why would misleading statements ever result in a shutdown of a company instead of a fine?

It's debatable whether Tether has a few inaccuracies or massive fraud.

Re: Tether Fined $41M for Lying About Reserves

#22

Post by lmkg »

danuker wrote: post #11

> there was never more than $61.5 million backing Tether, even as more 442 million coins were circulating at one point. Ah, pulling the classic "fractional reserve" I see.

On the initial headline I thought that $41 million would be negligible compared to the central role they have in the crypto ecosystem. But apparently that fine is 2/3 of their backing reserves.

Re: Tether Fined $41M for Lying About Reserves

#23

Post by nickff »

The CFTC claims to be helping end-customers by doing this kind of thing, but it is really taking money that could have been distributed off the table. Fining (and perhaps requiring the dismissal of) Tether's corporate officers would likely instill more discipline, but fining the company just hurts the customer.

Re: Tether Fined $41M for Lying About Reserves

#25

Post by [deleted] »

BbzzbB wrote: post #19
300bps wrote: post #8

Earlier quoted context omitted.

Or why outright lying that every Tether was backed by a U.S. dollar is termed “misleading”. It’s incredible - they had 4x as much Tether as dollars backing it and lied about audits taking place that never happened.

More than 7x ("at one point")

[deleted]

Re: Tether Fined $41M for Lying About Reserves

#26

Post by WalterSear »

BitwiseFool wrote: post #12
tdeck wrote: post #4

I don't understand why this is something they can settle rather than something that gets them completely shut down.

I'm not saying they shouldn't be shut down, but I genuinely wonder how that process would work. People don't have an account with Tether itself, so how would they be able to compel people to "return?" the Tethers and get their cash back?

* They don't need to? If Tether, the company, disappeared, the market can decide what to do with the, now entirely unbacked, Tether cryptocurrency.

* Tether, the company, can freeze specific Tethers they have issued, making them unusable as currency. Whoever shuts them down might be able to force them to do this en masse.

Re: Tether Fined $41M for Lying About Reserves

#27

Post by WalterSear »

BbzzbB wrote: post #19
300bps wrote: post #8

Earlier quoted context omitted.

Or why outright lying that every Tether was backed by a U.S. dollar is termed “misleading”. It’s incredible - they had 4x as much Tether as dollars backing it and lied about audits taking place that never happened.

More than 7x ("at one point")

That was then. This is now:

https://pbs.twimg.com/media/FBwhKnmXEAE1whT?format=jpg&name=...

Re: Tether Fined $41M for Lying About Reserves

#29

Post by AlexandrB »

SandB0x wrote: post #28
danuker wrote: post #11

> there was never more than $61.5 million backing Tether, even as more 442 million coins were circulating at one point. Ah, pulling the classic "fractional reserve" I see.

This is simply insolvency, not fractional reserve.

And yet, they're still operating. This is the kind of thing that makes me think the whole cryptocurrency ecosystem is a house of cards. Cryptocurrency advocates seem to be really bad at spotting and punishing incompetent and malicious actors in their markets.
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