Bitfinex CTO clarifies Tether Won't Fall into SEC's Nest As it's Next Target

By: Mark Jessy

December 31, 2020 9:10 PM

The Bitfinex CTO Ardiono in response to a tweet from CryptoQuant CEO Ki Young Ju, said: 
"Tether adheres to strict Know Yor Customer/Anti-Money Laundering regulations set forth by the Treasury Department’s Financial Crimes Enforcement Network, or 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 SEC's next target is Tether, it's going to be very, very bad for this bull run as this market heavily relying on $USDT.”


Similarly, lawyer Jake Chervinsky thinks it is unlikely that the SEC is the agency that will go after the USDT because stablecoins “are just about the hardest thing to classify as a security.” Instead, Chervinsky believes NYAG, which is already pursuing Tether in a Martin Act investigation, is best placed to take action.


Still, it is yet to be seen if Ardoino’s latest remarks are going to put an end to the persistent rumours about the USDT stablecoin.


In 2019, the New York attorney general filed a memorandum of law alleging that Tether and its sister company, Bitfinex, ran an unregistered securities offering. The document also alleges that the companies loaned USDT to investors, raising suspicion that the coins are not fully backed by U.S. dollar reserves as is claimed.


Tether’s USDT, which is allegedly only loosely pegged to the U.S. dollar, 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 paper that USDT was used to manipulate Bitcoin (BTC) price as it surged all the way up to $20,000.


Many within the crypto community are waiting for the outcome after the SEC filed a lawsuit against Ripple (XRP) for allegedly running an unregulated securities offering. The Ripple team will get the chance to prove its case in court. Meanwhile, SEC unclear regulatory footprints for the crypto community makes it difficult to draw conclusions.