Two regulators found Tether's reserves did not always match claims

Inherited archive entry · retained from the earlier edition. Its factual, legal and policy claims have not all been reverified for 19 September 2026. Research scope.

What the two orders found

New York's Attorney General and the CFTC investigated the same company from different angles and reached compatible conclusions. The NYAG settlement announcement, dated 23 February 2021, states that beginning in mid-2017 Tether 'had no access to banking, anywhere in the world' and therefore lacked sufficient reserves to back circulating tethers on a 1:1 dollar basis, contrary to its own public statements; it also records that on 1 November 2018 Tether published a verification claiming full backing, and the next day began transferring hundreds of millions of dollars out of the account that had supported that claim. The CFTC order, dated 15 October 2021, covers a sample period from June 2016 to February 2019 and finds that Tether held sufficient fiat reserves to back the tokens in circulation for only 27.6 percent of the days examined, while including undisclosed unsecured receivables and non-fiat assets within its reported reserves.

What each regulator required

The NYAG settlement bars Bitfinex and Tether from trading with New Yorkers, requires quarterly compliance reporting to the office, requires segregation of corporate and client accounts, and imposed an $18.5 million penalty. The CFTC order imposed a $41 million civil penalty on Tether and a separate $1.5 million penalty on Bitfinex for related off-exchange trading violations, without either company admitting or denying the findings in the CFTC's order.

Why 'fully backed' is a dated claim, not a fixed property

Both orders describe a company that made a standing public claim, full backing, while, on the regulators' account, failing to meet it for extended stretches. That distinction matters beyond this one case. A reserve claim describes a balance sheet at a moment; it says nothing binding about the next moment unless it is checked again. The CFTC's 27.6 percent figure is itself a historical measurement over a defined 2016 to 2019 sample, not a claim about any other period, and neither order addresses Tether's reserve composition after the dates each covers.

Questions to carry forward

• Over what exact period does a reserve claim apply, and is that period stated alongside the claim?
• Does the entity making the claim have a documented history of a gap between the claim and a regulator's measurement?
• What compliance reporting, if any, is required going forward, and to whom is it made?

Two regulators, working independently, found the same pattern: a claim of full backing that did not hold at every point in time it was made. That is a finding about specific dated periods, and it is the reason a reserve claim should always be read with its effective date attached.