For years, Tether told customers and the broader cryptocurrency market that it had $1 in reserve to back every token, the Commodity Futures Trading Commission said in a Friday statement. That claim was wildly misleading, according to the agency. For instance, from June to September 2017, there was never more than $61.5 million backing Tether, even as more 442 million coins were circulating at one point.

“This case highlights the expectation of honesty and transparency in the rapidly growing and developing digital assets marketplace,” said acting CFTC Chairman Rostin Behnam.

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 and because it’s designed to be largely immune to volatile price swings — a function of its one-to-one peg to fiat currencies.  

But many traders have long been skeptical that Tether genuinely had the money backing the coins that it claimed. More recently, the Treasury Department and other federal agencies have been alarmed by the stablecoin’s dramatic growth. There are now Tethers worth about $69 billion in circulation, prompting concerns that crypto-market disruptions could trigger chaotic investor fire sales that threaten the financial system. 

In its enforcement action, the CFTC said Tether failed to disclose that it held unsecured receivables and non-fiat assets as part of its reserves, and falsely told investors it would undergo routine, professional audits to demonstrate that it maintained “100% reserves at all times.” In fact, Tether reserves weren’t audited, the agency said. Until at least 2018, Tether manually kept tabs on its reserve levels, a process that wasn’t updated in real time, the CFTC said. Tether didn’t admit or deny the CFTC’s allegations.

“Tether agreed to resolve this matter in order to move forward and focus on the future,” the company said in a statement posted on its website. 

The CFTC also announced that Bitfinex, a crypto exchange affiliated with Tether, was fined $1.5 million for permitting retail transactions by American residents.

The case follows a February settlement with New York Attorney General Letitia James, who accused Bitfinex and several Tether affiliates of hiding losses and lying that each token was supported by one U.S. dollar. The companies agreed to pay a $18.5 million fine without admitting or denying her claims. The U.S. Justice Department is separately investigating whether executives behind Tether committed bank fraud by concealing from lenders that transactions were linked to crypto, Bloomberg has previously reported. 

Treasury officials are preparing to release a report on stablecoins, and officials are also discussing whether to launch a formal review by the Financial Stability Oversight Council into whether the tokens pose a systemic economic threat. Tether is a key focus of the government scrutiny, people familiar with the matter have said.