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US regulators are investigating a major cryptocurrency exchange, raising suspicions of fraud

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Credit: Tether

Last month, the US Commodity Futures Trading Commission (CFTC) subpoenaed cryptocurrency exchange Bitfinex and the company Tether, which has launched a popular coin of the same name, anonymous sources told Bloomberg today.

Tether claims that all of its coins are backed by US dollars held in reserve or other fiat currencies, although it hasn’t provided hard evidence to confirm this. Tether’s current market capitalization is $2.2 billion, according to CoinMarketCap.com, driven by the recent surge in cryptocurrency prices.

Both firms have the same CEO, Jan Ludovicus van der Velde, although little else is known about him. Although Tether lists Bitfinex as one of the main exchanges it’s integrated with, Bitfinex omits Tether from the dozens of cryptocurrencies on the front page of its website. Bitfinex did mention Tether in a 2015 blog post, but it did not mention any shared ownership at the time.

Bitfinex did not immediately respond to a request for comment. It told Bloomberg in an emailed statement: “We routinely receive legal process from law enforcement agents and regulators conducting investigations ... It is our policy not to comment on any such requests.”

This past weekend, reports surfaced that Tether’s relationship with the audit firm Friedman LLP, which had been working on an audit of Tether, had dissolved. Tether then confirmed the rumors to CoinDesk: “Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame.”

The CFTC has gotten more aggressive about prosecuting cases of cryptocurrency fraud in the past month. In several cases, it has filed a federal court enforcement action against people and companies that it has accused of misappropriating funds, preying on customers interested in bitcoin and litecoin, or otherwise committing acts of fraud.