Regulators slap Tether with another fine
US financial watchdog CFTC fined Tether — issuer of world’s most popular centralized stablecoin USDT — for $41 million as part of a settlement deal. The company has been accused of misleading public about its stablecoin being backed 1-to-1 by US dollars.
According to the regulator, for a 2-year period Tether didn’t have sufficient reserves to fully back all issued USDT tokens. The company had also failed to timely disclose that it held non-fiat assets in its reserves, including a $750 million loan to its affiliated cryptocurrency exchange Bitfinex after the latter lost access to $850 million, which were entrusted to Panamanian Crypto Capital and later seized by Polish authorities on money laundering charges in connection with Colombian drug cartels. The aforementioned loan to Bitfinex accounted for around one-third of total USDT supply at that time. In 2021, Tether claimed that its affiliated exchange has fully repaid the loan.
The CFTC also ordered iFinex — the parent company of Bitfinex — to pay a $1.5 million fine for performing off-exchange retail commodity transactions.
A few days earlier, Bloomberg BusinessWeek published a long-read article about Tether, accusing the company of using its stablecoin collateral for investment purposes. The report also alleges that Tether’s reserves include billions of dollars of short-term loans to large Chinese corporations. According to the article, Tether hasn’t yet disclosed where it keeps all of its money, besides a portion of it at the Bahamian Deltec Bank & Trust.
Earlier in February, Tether and Bitfinex have settled with the New York Attorney General, paying a $18.5 million fine without admitting wrongdoing. The sister companies have been prohibited from conducting any business in New York State. NY AG Letitia James said in a statement that “Bitfinex and Tether recklessly and unlawfully covered up massive financial losses to keep their scheme going and protect their bottom lines”.
Steam bans blockchain-based games while Epic welcomes them
Steam — the PC gaming online store juggernaut — decided to ban games that utilize blockchain tech, including cryptocurrencies and NFTs. Steam is a web2 centralized storefront that gets a 20-30% cut from all sales generated on its platform.
The company has been accepting bitcoin payments from 2016 until the end of 2017, when bitcoin transaction fees reached $50 at the peak of a local price bubble, which was followed by a major market crash and Big Tech crackdown on crypto-related content.
Following Steam’s announcement, the CEO of Epic said that Epic Games Store welcomes games that make use of blockchain tech. Epic’s most popular game Fortnite already has in-game currency (V-Bucks) and has been banned from the App Store and Google Play in 2020 for trying to bypass platforms’ 30% revenue cut for all in-app purchases.
After the crackdown, Android users were still able to download Fortnite onto their phones from the Epic Games app or from the Samsung Galaxy Store, while iPhone players had to use various workarounds due to Apple’s closed ecosystem. The incident highlighted the need for decentralized censorship-resistant ways to distribute apps to mobile devices.
Note that while Epic Games took a friendlier stance on crypto and NFTs, its store is still based on web2 tech with in-built censorship tools and a 12% revenue cut.
In other news
The ProShares Bitcoin Strategy ETF began trading on the New York Stock Exchange under the ticker BITO. The ProShares exchange-traded fund holds bitcoin futures, not BTC itself. Although, there are plenty of other Bitcoin ETF filings pending approval by the US regulators.
DEFI5 and CC10 indices of the Indexed Finance protocol have been exploited to the tune of $16 million. The attacker took an advantage of how index pools are rebalanced. Shortly after the exploit the dev team identified the attacker and threatened with legal action unless he returns 90% of the funds.
Swiss non-profit advisory organization 2B4CH launched an initiative to make Bitcoin one of the country’s reserve assets, alongside with gold. If 100,000 signatures are gathered successfully, the vote on the proposal will legally have to happen.
Some phishing sites are now displaying fake MetaMask pop-up tabs, tricking users to input their 12 word recovery phrases.