Lutnick’s Cantor Fitzgerald Struck Deal to Acquire 5% Stake in Tether for up to $600 Million

Highlights:

• Cantor agreed to acquire 5% of the stake in Tether, valued at $600 million.
• Tether’s USDT leads the stablecoin market, with Cantor Fitzgerald managing $133 billion in assets.
• U.S. prosecutors are investigating Tether for potential involvement in illegal activities like terrorism and hacking.

Financial services firm Cantor Fitzgerald, led by Donald Trump’s Commerce Secretary nominee Howard Lutnick, reached an agreement to acquire 5% of stablecoin issuer Tether in 2023. The stake was reportedly valued up to $600 million when the agreement was made, according to a November 23 report from the Wall Street Journal (WSJ), citing business associates familiar with the matter. This move highlights Cantor Fitzgerald’s strategic interest in Tether, a key player in cryptocurrency.

WSJ on Tether…

“Devasini said privately earlier this yr that Lutnick will use his political clout to try to defuse threats facing Tether.”

“Cantor, which is majority-owned by Lutnick, holds most of Tether’s $134bil in assets.”

Cantor apparently has 5% stake in Tether as well. pic.twitter.com/QHOWsvY4bq

— Nate Geraci (@NateGeraci) November 24, 2024

Cantor’s CEO actively supports stablecoins, particularly Tether’s USDT and Circle’s USDC. Tether’s USDT, pegged to the U.S. dollar, is the leading stablecoin by market cap. Fitzgerald holds most of Tether’s $133 billion in assets, earning millions in fees each year, sources told WSJ.

Trump Nominates Cantor Fitzgerald’s Lutnick as Commerce Secretary

On November 19, Trump selected Howard Lutnick as Commerce Secretary, according to an announcement on Trump’s Truth Social platform. As Commerce Secretary, Lutnick will oversee 13 bureaus within the Department of Commerce, including the Census Bureau and the Office of the United States Trade Representative. His duties will involve advancing Trump’s tariff-focused trade policies, encouraging foreign investment, and negotiating trade agreements.

US Prosecutors are Investigating Tether: WSJ

The Wall Street Journal reported last month that a criminal investigation is examining whether Tether is being used for illegal activities like terrorism and hacking. The Treasury Department is also considering sanctions against Tether due to its use by U.S.-sanctioned individuals and groups. The investigation also looks into whether USDT has been used to fund crimes like terrorism, hacking, drug trade, and money laundering.

According WSJ, U.S. investigators are conducting a criminal investigation into Tether, exploring whether third parties have used Tether for illicit activities such as terrorism and hacking. This investigation is being led by the Manhattan U.S. Attorney’s Office. Additionally, the…

— Wu Blockchain (@WuBlockchain) October 25, 2024

Tether responded to the allegations by criticizing the WSJ’s report. The company called the article “irresponsible” and said it was wrong to publish claims without verified sources or confirmation. Tether emphasized it is unaware of any ongoing investigations.

As we told to WSJ there is no indication that Tether is under investigation. WSJ is regurgitating old noise. Full stop.

— Paolo Ardoino 🤖🍐 (@paoloardoino) October 25, 2024

Tether called the report “pure rank speculation” and criticized the news platform for “carelessly” overlooking the company’s strong cooperation with law enforcement. The firm highlighted its efforts to combat bad actors misusing USDT and other crypto assets.

Tether Paolo CEO Ardoino said:

“As we told to WSJ there is no indication that Tether is under investigation. WSJ is regurgitating old noise. Full stop.”

Lutnick’s Commerce Secretary Appointment Raises Concerns Over Tether Regulation

Lutnick’s role as Commerce Secretary sparks regulatory concerns about Tether. His financial ties to Tether raise questions about potential political influence. This dual involvement could shape cryptocurrency regulation in the U.S. Lutnick plans to resign from Cantor once his role as U.S. Commerce Secretary is confirmed by the Senate. He stated he would sell his interests to comply with government ethics standards.

He stated:

“I intend to divest my interests in these companies to comply with U.S. government ethics rules and do not expect any arrangement which involves selling shares on the open market.”

Tether announced a $2.5 billion profit for the third quarter. This brought its total profit for the first nine months of 2024 to $7.7 billion, up from $5.2 billion in the first half of the year. Demand for stablecoins has risen this year, partly due to post-COVID inflation and higher interest rates aimed at cooling the economy.