Sen. Elizabeth Warren (D-Mass.) demanded answers from Commerce Secretary nominee Howard Lutnick on Tuesday with regard to his association with the controversial stablecoin-issuing company Tether USDT/USD.
What Happened: Warren wrote a letter to Lutnick, questioning potential financial conflicts arising out of the relationship between his firm, Cantor Fitzgerald, and Tether.
Cantor, Tether’s Wall Street custodian, holds billions of dollars in U.S. Treasuries to support the USDT stablecoin—a cryptocurrency increasingly used to facilitate unlawful activities.
"In particular, your deep involvement with and support for Tether, a known facilitator of criminal activity that has been described as ‘outlaws' favorite cryptocurrency' raises concerns about your judgment and ability to put the interests of the American people ahead of your own financial interests,” the senator wrote.
Warren sought details about Lutnick’s financial stake in Tether, any discussions with Trump administration officials about Tether, and whether Cantor Fitzgerald performed due diligence to ensure Tether’s compliance with international sanctions, anti-money laundering laws, and the Bank Secrecy Act’s “Know Your Customer” rules.
Cantor Fitzgerald and Tether didn’t immediately return Benzinga’s request for comment.
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Why It Matters: Warren’s questions to Lutnick come ahead of his Wednesday confirmation hearing in the Senate.
Lutnick has praised Tether in the past, stating that the company had sufficient reserves to back its $139 billion-valued stablecoin.
On the other side, Tether has attracted heat for being a popular tool for drug traffickers and illegal gaming platforms to launder money. A UN report from last year explicitly mentioned USDT’s role in boosting the illicit digital economy in Southeast Asia.
According to his financial disclosure, Lutnick said he would divest all his holdings in subsidiaries of Cantor Fitzgerald and also resign from positions in these companies upon confirmation by the Senate.
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