Kevin paffraff, what up tether's latest black eye is a cftc fine about lying about its reserves. Oh, my gosh, the one thing that i've constantly talked about with uh cryptocurrencies that make me nervous, is the reserves that underlay stable coins, because, especially if you think you're farming a yield and - and you have this currency as a savings account essentially and all of a Sudden you're earning a yield on things like tether, usdc or whatever gemini, and this money's actually being lent out and you're not aware or if we're fully aware or comprehending that it's fully lent out when you're accepting these yields, then the underlying reserves become even more of A concern because if the reserves crippled, then the lending market crippled and you could see some big ouchy wow cheese in the crypto market, which a big algae watching in the crypto market. That's now worth uh that has exposure to seven trillion dollars worth of equities, including square tesla and others, visa, mastercard, jp morgan and so on. You, you could really hurt the market and that's why regulators are paying attention to things like tether right now and so uh.

Look at this, the biggest stable coin issuer has been hit with a 41 million dollar penalty and bitfinex has been fined 1.5 million together or sorry. Tether will pay 41 million to settle allegations that it lied in claiming its digital tokens were fully backed by fiat currencies. Putting a major compliance headache between the world's biggest issuer of stable coins, even as regulatory scrutiny intensifies not a surprise to see this at all. The tether fudd was all over the place and it was not wrong.

Remember fear is different from fake news. I say that because sometimes we hear fud and we just kind of write it off as fake news. But no fud stands for fear, uncertainty and doubt, and it makes sense that there is fear, uncertainty and doubt because there are red flags. And what do they say when uh when there's smoke, there's fire right anyway for years tether, told customers in the broader crypto market that it had one dollar in reserve? For every token, however, the commodity futures trading commission said friday in a statement.

Well, that's what they said in the statement reiterating that, however, the claim was wildly misleading. According to the agency, for example, from june to september of 2017, there was never more than 61.5 million dollars backing tether, even as roughly 442 million coins were circulating. At one point no way: oh, my gosh - that's 61.5 only represents 14 folks 14 backing on tether, that's horrible in 2017., that's horrible! I mean that goes way back to 17, but that's not a good reputation, 14 and you're saying it's one to one! That's! That's very dishonest. This case highlights the expectation of honesty and transparency in the rapidly growing and developing digital assets market.

I completely agree with that. I mean i personally think this is the kind of regulation that we really do need. If companies are telling us hey, don't worry, our stablecoin is backed one to then prove it and make it clear to people with proper disclosure that, if they're getting a yield their money's being lent out and that they do not have claims to the underlying asset. That's the big thing people think, even though i'm getting a yield.

Oh it's! Okay, it's backed one to one. I could always exchange it for a dollar. No, you can't, if you're, taking a yield, because then it's being lent out tether is widely used to trade, bitcoin and other tokens, making it pivotal to the crypto market. That's because the coin allows quick transactions, largely immune to volatile price swings as a function of its one-to-one peg, but many traders have long been skeptical that tether genuinely had money backing the coins that claim more recently, the treasury department and other federal agencies have been alarmed By the stable coins dramatic growth, there are now tethers worth about 69 billion in circulation, prompting concerns that crypto market disruptions could trigger chaotic fire sales right.

This is basically what i just described in its enforcement action. They say tether failed to disclose what they were holding especially yeah. This is the other thing they they have a lot of uh here. Look at this unsecured receivables which are like promises to repay cash and non-fiat assets, which could in theory be other cryptocurrencies, which is weird because like if tether is backing its coin with other bitcoin, that that would be odd, right, uh or uh or potent or a Lot of junk bonds potentially like there was a lot of fear when the ever grand crisis happened.

That tether was investing in evergrand, junk bonds turns out they weren't, or so they say and so uh. You know some of that fear was sort of alleviated for tether. Falsely told investors it would undergo routine professional audits to determine that it maintained 100 reserves at all time, but in fact, tether reserves weren't audited until at least 2018 tether manually kept tabs on its reserve levels, process that wasn't updated in real time, tether didn't admit or Deny the commodity future trading commission's allegations and tether agreed to resolve the matter in order to move forward and focus on the future. The company said in a statement posted on the website, bitfinex also hit, and this follows a february settlement with between the new york attorney general bitfinex and several tether affiliates of hiding losses and lying that each token was supported by one dollar, ah yeah yeah.

Then the companies uh together agreed to pay an 18.5 million fine without admitting or denying uh claims. Okay treasury officials are preparing to release reports on stable coins. That's going to be interesting! That report i'm excited for that and the gme report. Looking for that, one and officials are also discussing whether to launch a formal review by the financial stability oversight council and to whether or not the tokens pose a systemic economic threat.

I think they probably do pose some form of systemic threat, again seven trillion dollars, even though the crypto market's like two trillion dollars, because there's so many stocks like companies right companies that sell their shares on the stock market, uh that have exposure to crypto, whether they're Miners, whether they're uh, you know uh jp morgan visa, whatever trying to affiliate trying to transact right like square cash app these. These are exposures even public, where you can get a free stock worth all the way up to seventy dollars up to seventy dollars. By going to medicaid.com public they're exposed to crypto as well right, a lot of private equity also exposed to crypto nfts lots of this liquidity crisis and crypto would be pretty bad for a lot of things. But anyway, tether is a key focus of government scrutiny.

Don't forget also, though you have things like usdc and the gemini dollar that have a lot of similarities, maybe not as much as tether, but still the fact that it's being lent out is still a similarity uh, but anyway, that's interesting on tether, fascinating, at least now. This kind of puts this behind us, though, which is good. Hopefully now we can go forward with a cleaner slate, but anyway, in the meantime. Thank you so very much for watching check out the programs link down below and building your wealth, get that 41 off coupon code before october 29th.

Make sure to get your free stock with public worth all the way up to seventy dollars. By going to mechanic.com public and folks, we will see you in the very next video thanks so much goodbye like and subscribe. Bye.