Howard Lutnick, Donald Trump's nominee for Commerce Secretary, is set to face some tough questions during his upcoming Senate committee hearing. Lutnick, a prominent Wall Street figure and a long-time friend of Trump, has recently disclosed his financial assets.
Senator Ted Cruz, who chairs the Committee on Commerce, Science, and Transportation, has called Lutnick an “excellent choice.” However, Democratic senators are likely to challenge him on his ties to Tether, the company behind the dollar-pegged stablecoin, USDT.
Lutnick leads Cantor Fitzgerald, a financial services firm that manages billions in U.S. Treasury bonds. Tether uses these bonds to back its stablecoin. Additionally, Cantor owns a 5% stake in Tether and is working on a Bitcoin-backed lending program with them, according to The Wall Street Journal.
He's also been a vocal supporter of Tether. In an interview at the World Economic Forum in Davos in 2024, Lutnick said, “Holding your dollar in a token is amazing.” Tether's market value stands at around $139 billion.
However, USDT has raised concerns. Experts say it's become a tool for money laundering. In 2024, the United Nations Office on Drugs and Crime reported that $17 billion in USDT was linked to illegal activities. In 2023, TRM Labs highlighted its extensive use by terrorist networks.
Lawmakers worry about USDT's role in the fentanyl crisis. A 2023 report by Elliptic revealed that Chinese manufacturers supplying fentanyl precursors used Bitcoin and USDT wallets for payments. Senator Elizabeth Warren pointed out that fentanyl is now the leading cause of death among Americans aged 18 to 45.
In interviews with DL News in 2024, Tether's CEO, Paolo Ardoino, stressed the company's commitment to working with the U.S. Department of Justice to prevent criminal use of USDT. Since its launch in 2014, Tether has frozen about 1,800 cryptocurrency wallets linked to illegal activities.
Ardoino is also trying to get a top global accounting firm to audit Tether’s reserves. This aims to address ongoing concerns about whether the company has enough cash to back USDT. Currently, Tether publishes quarterly attestations of its assets, reporting a profit of $5.2 billion from its reserves in the first half of 2024.
Since 2021, Lutnick and Cantor Fitzgerald have played a key role in managing Tether's reserves. Cantor is one of the 24 primary dealers authorized to trade U.S. government bonds directly with the Federal Reserve. This allows them to quickly liquidate Treasuries, which are Tether's top reserve asset, for cash.
If confirmed, Lutnick will oversee a department focused on promoting U.S. businesses internationally and supporting the domestic economy. While the Commerce Department enforces trade laws globally, the U.S. Trade Representative will lead Trump’s tariffs policy.
Before his confirmation hearing, Lutnick, who is 63, announced that he would step down as CEO of Cantor Fitzgerald. He also plans to resign from his roles at BCG Group and Newmark Group, as detailed in a 92-page financial disclosure report. Additionally, Lutnick intends to divest his stakes in over 800 companies.
Interestingly, unlike many other officials in Trump’s cabinet, Lutnick doesn’t seem to hold any cryptocurrency assets. He reported a stake in the crypto collectibles firm Candy Digital and the stablecoin exchange Tru Markets. He is also an investor in Rumble, a video platform popular with right-wing audiences. Tether invested $775 million in Rumble in December.