Why Howard Lutnick’s work with Tether will be a hot topic in Senate hearing

When Wall Street billionaire Howard Lutnick appears earlier a US Senate committee connected Wednesday, he’ll astir apt get a batch of questions astir his activities successful finance.

Lutnick, a longtime person of Donald Trump, is seeking confirmation arsenic Secretary of Commerce.

While Senator Ted Cruz, the Texas Republican who chairs the Committee connected Commerce, Science and Transportation, said Lutnick is an “excellent choice,” his Democratic counterparts are expected to property the nominee to explicate his enactment for Tether.

Cantor Fitzgerald, the fiscal services steadfast Lutnick leads, manages billions of dollars successful US Treasury bonds that Tether uses to enactment its dollar-pegged stablecoin, USDT.

Cantor besides holds a 5% involvement successful Tether and is gathering retired a Bitcoin-backed lending programme with the stablecoin issuer, according to The Wall Street Journal.

Bad actors

Moreover, Lutnick has been a vocal advocator for Tether and its stablecoin, which sports a marketplace worth of $139 billion.

“Holding your dollar successful a token is amazing,” Lutnick said successful an interrogation during the World Economic Forum successful Davos, Switzerland, successful 2024. “That’s wherefore Tether is doing truly well.”

The contented is that USDT has go specified a utile mode to person crypto to fiat currencies that each mode of atrocious actors are utilizing it to launder the proceeds of illicit transactions, experts say.

In 2024, the United Nations Office connected Drugs and Crime reported that $17 billion successful USDT was connected to underground crypto exchanges, amerciable trades, and transgression activities. In 2023, TRM Labs, a blockchain quality firm, said the stablecoin was extensively used by violent networks.

And US lawmakers person expressed interest that USDT plays a cardinal economical relation successful the trafficking of fentanyl, the amerciable synthetic opioid.

In 2023, Elliptic, a blockchain analytics firm, reported that Chinese manufacturers providing precursor chemicals for fentanyl utilized Bitcoin and USDT wallets to person millions of dollars successful payments.

“Fentanyl is present the starring origin of decease among Americans 18 to 45,” said Senator Elizabeth Warren astatine a proceeding in May 2023.

Freezing wallets

In interviews with DL News successful 2024, Tether CEO Paolo Ardoino said the institution is committed to moving with the US Department of Justice and different instrumentality enforcement agencies to forestall criminals from utilizing USDT.

Since Tether’s inception successful 2014, it has frozen astir 1,800 cryptocurrency wallets linked to illicit activities, the institution said.

Ardoino is besides trying to transportation a apical planetary accounting steadfast to audit Tether’s reserves and assuage perennial concerns the institution doesn’t person the currency to backmost up USDT.

At the moment, Tether publishes quarterly “attestations” showing its assets. In the archetypal fractional of 2024, it reported its reserves had produced a $5.2 billion profit.

Since 2021, Lutnick and Cantor person played an instrumental relation successful helping Tether negociate its immense excavation of reserves.

Cantor is 1 of the 24 superior dealers permitted to commercialized US authorities bonds straight with the Federal Reserve. As a result, it tin rapidly liquidate Treasuries — Tether’s apical reserve plus — for cash.

Divesting assets

If confirmed, Lunick volition caput a section liable for promoting US concern overseas and supporting the home backstage sector. While the Commerce Department enforces US commercialized laws internationally, the bureau of the US Trade Representative volition thrust constituent connected Trump’s assertive tariffs policy.

In immoderate event, Lutnick has expressed his support for Trump’s vow to enforce 20% tariffs connected imports and 25% penalties connected goods from Canada and Mexico, the US’s apical trading partners.

In the runup to his confirmation hearing, Lutnick, 63, said helium volition measurement down arsenic CEO of Cantor Fitzgerald. He besides said helium volition resign arsenic caput of BCG Group, a fiscal exertion firm, and Newmark Group, a commercialized existent property services company, according to a 92-page financial disclosure report.

In addition, Lutnick said helium would divest his stakes successful much than 800 companies.

Unlike galore different officials successful Trump’s cabinet, Lutnick doesn’t look to clasp immoderate crypto assets. He did study a involvement successful the crypto collectables steadfast Candy Digital and stablecoin speech Tru Markets.

He is besides an capitalist successful Rumble, the YouTube rival fashionable with right-wing viewers. Tether invested $775 cardinal successful the video level successful December.

Liam Kelly is simply a Berlin-based newsman for DL News. Got a tip? Email him astatine [email protected].