Loosen up, Tether gained’t be focused by SEC, says Bitfinex CTO
Bitfinex’s outspoken chief technology officer Paolo Ardoino took to Twitter this week to allay concerns that Tether might be the US Securities and Exchange Commission’s next target.
In response to a tweet from CryptoQuant CEO Ki Young Ju, Ardoino said Tether adhered to stringent anti-customer and money laundering regulations set by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). In other words, people who say Tether is less regulated are just spreading “FUD” – or fear, uncertainty and doubt.
Ki Young’s original tweet said, “If the SEC’s next target is tether, it will be very, very bad for this bull run as this market relies heavily on USDT.”
Reminder: #Tether is registered and regulated under FinCEN as all centralized competitors. Strict KYC / AML is applied to all Tether direct users, as are the other major issuers. Only FUD is less regulated. Are you wondering who will benefit from the spread of such misinformation? https://t.co/0izlgpJ75r
– Paolo Ardoino (@paoloardoino) December 30, 2020
While Ardoino isn’t wrong in pointing out Tether’s KYC / AML compliance, he doesn’t really address Ki Young’s central concern that the stablecoin may have circumvented securities laws, especially if their dollar reserves are at risk.
In 2019, the New York attorney general filed a memorandum of law alleging that Tether and its sister company Bitfinex had made an unregistered securities offering. The document also alleges that the companies lent USDT to investors, raising suspicions that the coins are not fully backed by US dollar reserves, as is claimed.
Allegedly only loosely tied to the US dollar, Tether’s USDT has been at the center of controversy for several years. In 2018, finance professor John Griffin and co-author Amin Shams argued in a research report that USDT was used to manipulate Bitcoin (BTC) price as it soared to $ 20,000.
Tether and Bitfinex were summoned by the Commodity Futures Trading Commission in 2018 to demonstrate that USDT is backed by equivalent dollar reserves. Despite the allegations, no company was accused of misconduct.
Many members of the crypto community are waiting for the next domino to fall after the SEC filed a lawsuit against Ripple over alleged unregulated securities offerings. Ripple will get the chance to prove its case in court. Meanwhile, market participants are being asked not to draw any conclusions from the regulator’s allegations.