Trump's Commerce secretary pick is getting closer to a crypto firm being investigated by the feds
President-elect Donald Trump’s pick to lead the Commerce Department is moving to deepen the ties between his company and the firm behind the world’s largest stablecoin, Tether.
Cantor Fitzgerald CEO Howard Lutnick is discussing receiving support from Tether for its planned program that will allow clients to borrow money using Bitcoin as collateral, Bloomberg News reports. The initiative will start with $2 billion in funding, although it could eventually grow to tens of billions of dollars.
The firm also has struck a deal to invest in the crypto giant, the Wall Street Journal reported Saturday, which gave Cantor about a 5% ownership in Tether, valued at as much as $600 million. Cantor, which is majority-owned by Lutnick, holds most of Tether’s $134 billion in assets in exchange for tens of millions of dollars of fees annually, the Journal reports.
If Lutnick is confirmed to his post by the Senate, he will step down from his positions at Cantor, Newmark, and BGC Group, he said in a statement after Trump announced his nomination.
He would also hand over control of his company to colleagues at the firm, Bloomberg reports. Lutnick’s son, Brandon Lutnick, works at Cantor as a trader and previously interned with Tether in Lugano, Switzerland, where he reportedly counted the gold bars Tether keeps in a vault buried inside a mountain.
Currently, Lutnick works with Trump as a co-leader of his transition team, helping vet and choose candidates to serve in the incoming administration.
That gives Lutnick significant influence over Trump’s second administration, which is poised to be much friendlier to cryptocurrency than President Joe Biden’s White House. Trump has made a number of promises to the crypto industry, including a pledge to establish a strategic national Bitcoin reserve.
Tether told the Journal that it is “laughable” that Lutnick’s involvement would translate to influence over regulatory actions. Tether, known for its 1:1 backing with the U.S. dollar, has become a preferred medium for criminals to move money and has repeatedly come under investigation.
In October, the Treasury Department and the Department of Justice began probing Tether for possible sanction and anti-money-laundering rule violations, the Journal reported. Sanctions against Tether would prevent Americans from doing business with the company.
“To suggest that Tether is somehow involved in aiding criminal actors or sidestepping sanctions is outrageous,” Tether told the Journal in October, noting that it works with international law enforcement agencies “to combat illicit activity.”
Groups including Russian arms companies, Middle Eastern terrorist organizations like Hamas, and North Korea’s nuclear program have used Tether and other cryptocurrencies.
Newly unsealed court records, first reported by 404 Media, show that the FBI is investigating a money laundering organization using crypto brokers to move money for major Mexican cartels, including the Sinaloa cartel. The FBI believes more than $52 million in drug proceeds were laundered between 2021 and 2023.
