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CFTC slaps Tether and Bitfinex with $42.5 million fine over misleading statements

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  • Tether is hit with $41 million in fines to settle allegations of misleading statements. 
  • Bitfinex was fined $1.5 million for facilitating retail transactions for American citizens. 
  • Tether has been under the lens of financial regulators over claims of stablecoin reserves for years on end. 

Financial regulators have investigated Tether and Bitfinex for criminal probe into bank fraud and misleading statements. Currently, over $62 million worth of Tether is in circulation, which is likely to impact the broad cryptocurrency market. 

Tether and Bitfinex hit by CFTC fines; there may be an impact on the crypto market

US regulators have accused Tether of making untrue or misleading statements. The Commodity Futures Trading Commission (CFTC) slapped a penalty of $41 million on Tether and $1.5 million on Bitfinex. 

Bitfinex was fined for allowing American citizens to transact on its exchange. The CFTC announced the penalties earlier today.  

Tether has played a key role in the crypto ecosystem, and the US Justice department’s focus is on the stablecoin’s activity in nascent stages following its launch in 2014. Federal prosecutors investigated transactions that were linked to crypto, and banks were unaware of their nature. 

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Former probes remained confidential, according to sources close to the Department of Justice (DoJ). A criminal probe is one of the key developments in the crackdown on cryptocurrencies by regulators. 

Over $62 billion worth of Tether tokens are in circulation; proponents believe it is too big to fail. In a statement, Tether stated:

Tether routinely has an open dialogue with law enforcement agencies, including the DOJ, as part of our commitment to cooperation and transparency.

In light of recent events, however, Tether is faced with a more significant challenge, safeguarding the interests of the crypto community by not failing. Traders across fiat-crypto exchanges and peer-to-peer platforms exchange their fiat for stablecoins to access the cryptocurrency ecosystem. 

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If Tether fails, the inflow of stablecoins to exchanges could be impaired, triggering a drop in capital inflow to Bitcoin. 

In their concurring statements, CFTC was quoted:

The settlement with the Tether respondents finds that there were misrepresentations regarding the assets backing tether, specifically that the USDT tokens were backed 1-to-1 by US dollars. The evidence establishes that this assurance provided to tether customers was not 100% true, 100% of the time.

Tether officials are held accountable by the CFTC. Further, the CFTC has applied a commodities’ definition to stablecoins. Regulators are concerned that enforcement actions may confuse their role in cryptocurrency and stablecoin regulation. 

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The CFTC’s statement reads:

In a recent speech, SEC Commissioner Hester Peirce asked an important question when it comes to the US regulators’ review of stablecoins: Are we fighting for investors or are we fighting for jurisdiction? This question is front-and-center in my mind as I consider these settlements.

Tether believes that,

As Tether represented in the Order, it has always maintained adequate reserves and has never failed to satisfy a redemption request.

Tether has suggested that the CFTC’s findings regarding Bitfinex are related to its activities before December 2018. The stablecoin issuer is focused on resolving the matter and moving forward. 

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The statement reads as follows:

We are grateful that the market has consistently demonstrated its trust and confidence in Tether. We will continue to earn that confidence and lead the industry in innovation and transparency.

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Executives From Coinbase and Other Crypto Firms To Testify at Hearing on Digital Assets in News Source

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Executives from the top crypto firms in the US will be testifying in an upcoming hearing on digital assets to the House Committee on Financial Services, led by Congresswoman Maxine Waters.

In a statement, Waters names six executives in the digital asset space who will testify at the hearing on December 8th.

The names include:

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  • Jeremy Allaire, co-founder, chairman and CEO of blockchain-focused financial services firm Circle
  • Samuel Bankman-Fried, CEO and founder of crypto derivatives exchange FTX
  • Brian P. Brooks, CEO of full-service blockchain tech firm Bitfury Group
  • Charles Cascarilla, CEO and co-founder of blockchain infrastructure firm Paxos Trust Company
  • Denelle Dixon, CEO and executive director of non-profit organization Stellar Development Foundation
  • Alesia Jeanne Haas, CFO of popular crypto company Coinbase Global Inc.

The hearing is entitled “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States.”

In an interview with CNBC, Bitfury CEO Brian Brooks says that one of the things he hopes is discussed at the hearing is the lack of clarity behind the issuance of stablecoins.

“First of all, are we or are we not going to resolve some of the contradictions in US crypto policy?

Just to give you an example of that, we’ve got an administration that is taking the position that only banks should be able to issue stablecoins.

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But it seems like the posture of the administration is also that companies that issue stablecoins can’t be banks, so my hope is we’ll talk a little about how do we resolve these Kafkaesque contradictions.”

Brooks also mentions that he hopes Bitcoin (BTC) and crypto mining can be sold as something that can be a part of an environmentally sustainable future, rather than an obstacle to it.

The hearing can be watched live, here.

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BitTorrent Token Surges as Mainnet Launch Date Gets Confirmed

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The file sharing token bittorrent (BTT) surged higher in the crypto market today, following the news that the mainnet of its own BitTorrent Chain will be launched on December 12, along with a redenomination of all circulating tokens.

At the time of writing (10:00 UTC), BTT traded at USD 0.003947, up a whopping 67% for the past 24 hours. The strong gains positioned BTT as today’s second-best performing token among the top 100 coins by market capitalization, behind only the game-like decentralized finance (DeFi) token SPELL.

BTT price last 14 days:

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Source: CoinGecko

The price gains today came with sharply rising trading volumes across exchanges. As of press time, the 24-hour trading volume for BTT stood as USD 2.6bn, representing more than a tripling from USD 712m yesterday.

Upbit was the most active exchange for trading in the token, followed by Binance.

According to an announcement from BitTorrent Inc. – the company behind the token – the new BitTorrent Chain, shortened BTTC, will become a “heterogeneous cross-chain interoperability protocol” that leverages various sidechains for improved scaling of smart contracts.

The new blockchain will be based on the Proof-of-Stake consensus mechanism, and is said to enable interoperability between Ethereum (ETH), Tron (TRX) and Binance Smart Chain (BSC), with more chains to be supported in the future.

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At the same time, the announcement said that old BTT tokens starting from the same date will be exchangeable for new ones at a rate of 1:1,000. Accordingly, the total supply of tokens will also be increased from the current 990bn to 990trn, while the total market capitalization will remain the same.

Once the new mainnet is live, BitTorrent Inc. says use cases for its BTT token will include staking in return for rewards, participation in governance over the protocol, and payment of gas fees for token transfers on the BTTC blockchain.

At press time, BTT is ranked as the 51st most valuable cryptoasset, with a total market capitalization of USD 3.465bn, per CoinGecko.

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The token, which originally was built on the Tron blockchain, is intended to be used as an incentive for users of the file sharing clients BitTorret and µTorrent, for example as payment in exchange for faster download speeds between users.

The developer behind the two mentioned software clients, BitTorrent Inc., is a US-based company founded all the way back in 2004. BitTorrent / µTorrent today represent major peer-to-peer network for decentralized file sharing. It has an active user base of more than 90m people globally, according to the company.

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BitMart CEO Addresses Hacking Concerns, BitMart Keeps Top 30 Rank

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  • BitMart CEO addressed hacking concerns via tweet.
  • BitMart remains one of the top 30 exchanges.

Crypto hacking is one of the common cyber threats that the crypto world has endured in the past years. In fact, hacking is a word that is not new anymore in the crypto world. For example, these past days, unknown hackers have successfully penetrated the blockchain of the BitMart exchange. As a result, the exchange lost more than $150 million worth of digital currencies such as ETH and BSC tokens.

The incident came as a shock to the BitMart community, especially the holders of the affected tokens that were stolen. Also, this event spread like wildfire in the crypto space and gathered different opinions. This made the CEO of BitMart, Sheldon Xia react in a tweet post:

The tweet explains how the BitMart company plans to compensate its losses for the hacking incident. Furthermore, Sheldon Xia also stated that they are creating multiple teams to work on a project that will ensure the protection of its users. Indeed, this tweet made by the exchange CEO addressed the incident and provided peace of mind to its investors and traders.

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On the other hand, despite the hacking event, BitMart remains one of the top 30 crypto exchanges in CoinGecko. The exchange ranks along with the biggest exchanges such as Bithumb and KuCoin, to name some. With this, we can say that BitMart remains competitive in spite of the hacking challenges it faced lately.

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