US financial regulators are cracking down on shady cryptocurrency trading
Bitfinex, one of the world’s largest cryptocurrency exchanges, and Tether, a company that sells crypto-tokens it claims are pegged to the US dollar, were subpoenaed in December by the Commodity Futures Trading Commission, according to Bloomberg.
A shadowy backstory: Neither Hong Kong–based Tether nor Bitfinex, which is incorporated in the British Virgin Islands, has been transparent about its business dealings. It recently came to light, for example, that the two seemingly separate companies share executives. Some have questioned whether Tether is really backing its $2.3 -billion worth of outstanding tokens with dollars. The company hasn’t provided conclusive evidence that it is, and recently it cut ties with an accounting firm that had been conducting an audit.
The takeaway: Given the skyrocketing interest in cryptocurrency trading, regulators are on high alert. The exchange scene, with its long history of security lapses and lost funds, is likely to become a major target of scrutiny.
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