Tether Holdings Inc has recently faced controversy over the deactivation of major cryptocurrency firm accounts, such as MoonPay, BlockFi, CMS Holdings, and Galois Capital. Based on documents released by the New York Attorney General (NYAG), Tether reportedly deactivated around 29 accounts in 2021. The reasons behind these terminations were not explicitly disclosed, leading to an air of insecurity amongst the community.
Tether has maintained its reluctance to comment on individual relationships but clarified that all affected users had successfully undergone strict compliance checks. Users passed both during the onboarding process and ongoing monitoring in compliance with Tether’s policies. The company’s handling of these deactivations has added an additional layer of complexity to the situation, leaving many to wonder what may have transpired behind the scenes.
While the NYAG investigation concluded in February 2021, certain documents reveal that the investigation continued until around June of that year. User codes within these documents have already been redacted, adding to the curiosity surrounding Tether’s operations.
The Office of the New York Attorney General gathered this information during an investigation into Tether and its sister company Bitfinex, for the misappropriation of $850 million in funds. Ultimately, the parties involved reached a settlement that included paying an $18.5 million penalty and halting all trading activities in New York. This penalty and the company’s connection to the Bitfinex scandal have left some users questioning the legitimacy of the exchange.
Coinbase and other media outlets requested the NYAG to publicly disclose the initial quarterly report under the Freedom of Information Law (FOIL). Tether opposed this request, citing the need to protect its customers’ confidential information from potential exploitation. The NYAG allowed media outlets access to the documents, exposing the deactivation of several cryptocurrency company accounts in the process.
Opposing viewpoints emerge as some argue that Tether’s actions reflect a proactive approach to compliance and addressing potential issues, while others see this incident as evidence of the platform’s lack of transparency and commitment to its users.
As the crypto space continues to grow and evolve, the need for transparent and trustworthy platforms becomes more critical. This recent controversy surrounding Tether’s account deactivations highlights the importance of clear communication between exchanges and their users, as well as the vigilance necessary to ensure that exchanges are acting ethically and responsibly.
Source: Cointelegraph
