It might sound a little overblown, but a good part of our lives actually goes into figuring out what to make of the power structures around us. This, of course, includes learning how to best juggle the line of regulation while keeping our personal interests intact. Unfortunately, we have more than enough cases that give a window into our tendency of forgetting about our regulatory obligations. In a bid to curb such cases, we have increasingly diversified our governance footprint over the last few years, thus setting up the foundations for dedicated points of supervision across the board. While having a more narrowed down focus did a lot to help our cause, it didn’t quite achieve the expected level of results. In fact, certain by-products of this decision worsened the relationship between regulatory bodies and the companies. Hence, when technology turned up on the scene, the people in-charge didn’t just rope it in with an intention to fix a few things. Instead, what they wanted out of it was a whole restructuring job. Now, if we look at how the transition to a more tech-driven governance improved things, one only has to notice the prowess with which the authorities are able to track down the wrongdoings, but there is always a catch, isn’t it? Along with all the benefits, technology also brought with the controversial concept of virtual currency, which so far has been nothing short of a headache for the regulators. Nevertheless, by the looks of it, the vigilance around it is finally being stepped up, and the move is already paying dividends.
The Commodity Futures Trading Commission (CFTC) has adjudged the company behind popular digital token ‘Tether’ as guilty of misleading its investors by making false statements in regards to the token falling in line with U.S. dollars and other fiat currencies. As a part of the drive to bring more transparency into this particular sphere, CFTC fined the company a sum worth $41 million, thus delivering a needed precedent for the organizations that are taking an advantage of the obscurity around the concept.
As per the shared details, Tether Holdings Ltd failed to back its claim of Tether being a stablecoin, as the company consistently fell short of maintaining sufficient U.S. dollar reserves to move toe-to-toe with every active Tether token. Furthermore, the commission’s investigations also revealed that the organization kept the stakeholders in the dark about holding unsecured receivables and non-fiat assets in the reserves.
Tether Holdings, in response, has outright denied all the allegations. The company issued an official statement, which said:
“As to the Tether reserves, there is no finding that Tether tokens were not fully backed at all times — simply that the reserves were not all in cash and all in a bank account titled in Tether’s name, at all times,”
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