Curriculum·Graduate·G605
The GENIUS Compliance Surface
The New York Attorney General settlement with Tether and Bitfinex, February 2021. Tether issued the largest dollar stablecoin, USDT, on the representation that each token was backed one for one by dollars in reserve.
Lesson 1 opens on
The New York Attorney General settlement with Tether and Bitfinex, February 2021
Tether issued the largest dollar stablecoin, USDT, on the public representation that every token was backed one for one by dollars in reserve. In February 2021 the New York Attorney General concluded, after an investigation, that this had not been true at all times: for periods Tether had no banking access and held no reserves for some of the tokens in circulation, and hundreds of millions of dollars had moved between Tether and its affiliated exchange Bitfinex to cover up a roughly 850 million dollar loss, money the exchange had placed with a payment processor, Crypto Capital, that went missing.5 million dollar penalty, agreeing to stop serving New York, and agreeing to publicly disclose, by category, the assets backing the token.
The lessons
- G605-01What GENIUS makes checkableExplain the gap between an issuer's reserve claim and what a holder can verifyabout 33 min · opens on The New York Attorney General settlement with Tether and Bitfinex, February 2021
- G605-02Reserves and redemption as legal obligationsExplain why a dollar-pegged instrument must hold high-quality liquid reserves and honor redemptionabout 33 min · opens on The Reserve Primary Fund breaking the buck, September 2008
- G605-03The issuer as a regulated entityExplain that issuing money-like tokens makes the issuer a regulated money business, not a neutral platformabout 33 min · opens on e-gold, 2007 to 2008
- G605-04AML on a stablecoin the world can holdExplain why a widely-held, transferable payment token needs anti-money-laundering controls at issuanceabout 33 min · opens on Liberty Reserve, May 2013