American Regulators

American Regulators Have Hit Tether and Bitfinex with a Subpoena

American Regulators Subpoena Bitfinex and Tether

American regulators have subpoenaed Bitfinex and Tether, two of the biggest cryptocurrency platforms, which also happen to have a close association with each other. The subpoena was sent out by the U.S. Commodity Futures Trading Commission (CFTC) on December 6th, 2017. According to Reuters, specifics regarding exactly what information the CFTC had requested could not be confirmed. It’s also unknown at this time whether the CFTC has launched a formal investigation into this matter.

Donna Faulk-White, Deputy Director at CFTC, was requested by Reuters to provide further information, but she declined. Meanwhile, a representative from Bitfinex and Tether, stated that, “We routinely receive legal process from law enforcement agents and regulators conducting investigations. It is our policy not to comment on any such requests”. As most crypto-enthusiasts are aware, Bitfinex is a major crypto-trading platform and it is incorporated in the Virgin Islands. Tether is known for issuing digital currency that it claims is backed by the U.S. dollar.

CFTC Has Been Cracking Down on the Crypto-Market

The CFTC, and American regulators in general have been clamping down on crypto-related businesses. The reasons for these crackdowns mainly include market manipulation and fraudulent crypto-related schemes. Notably, the CFTC recently scrutinized several cryptocurrency operators for falsely claiming to invest people’s money into the crypto-market.

This is not the first time that Bitfinex has been targeted by the CFTC. Back in June 2016, the CFTC ordered Bitfinex to pay a fine of $75,000, which it called a “civil monetary penalty”. According to the American regulator, the crypto-exchange provided “illegal off-exchange financed retail commodity transactions” by using cryptocurrencies. Additionally, Bitfinex was accused of not registering as a futures commission business. Following this event, the crypto-exchange was hacked, and 120,000 bitcoins were stolen, valued at $72 million at the time.

Tether’s Business Operations Have Been Questioned

Tether has also come under the scrutiny of American regulators. The crypto-platform claims to be 100% backed by “traditional” currency held in its reserves, which it says is worth $2.3 billion. However, the company has not provided legitimate proof of its funds to the general public. Furthemore, Tether had reportedly agreed to an audit by Friedman LLP a few months back. However, Tether backed out of the audit by sending the following message:

“We confirm that the relationship with Friedman is dissolved. Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame. As Tether is the first company in the space to undergo this process and pursue this level of transparency, there is no precedent set to guide the process nor any benchmark against which to measure its success.”

Clearly, if the money that Tether claims is not actually there, then the crypto-market could be in some big trouble. It has been a rough week for cryptocurrencies as their value has declined sharply. This can be largely attributed to the worldwide crackdown on cryptocurrencies by regulators.