U.S. Senator Warren puts pressure on Commerce Secretary nominee Lutnick to explain his relationship with Tether

On January 29, U.S. Democratic Senator Elizabeth Warren was pressuring Trump's nominee for Commerce Secretary Howard Lutnick to explain his and his company Cantor Fitzgerald LP's relationship with Tether, raising questions about possible conflicts of interest ahead of Lutnick's confirmation hearing on Wednesday.

In a letter to Lutnick on Tuesday, Warren asked about his relationship with Tether Holdings Ltd., including the amount of investment he and Cantor Fitzgerald had made in the stablecoin issuer. She also asked Lutnick to detail any due diligence conducted and whether they had verified whether Tether complied with the "KYC" rules, international sanctions and anti-money laundering laws in the Bank Secrecy Act. Lutnick did not list Tether or any other cryptocurrency investments in his financial disclosure form, but listed assets worth at least $806 million and more than 800 legal entities in which he was involved. Cantor Fitzgerald holds shares in Tether and plays a role in its operations. Lutnick said in his ethics agreement that he would divest all of his holdings in Cantor Fitzgerald and its affiliates if approved by the U.S. Senate.

In her letter, Warren questioned whether these measures were sufficient to avoid conflicts of interest, noting Lutnick’s status as a well-known backer of Tether and his relationship with Tether’s billionaire chief financial officer, Giancarlo Devasini. Tether said in a statement that it complies with KYC rules and voluntarily cooperates with law enforcement to prevent illegal behavior. Tether denies any ties to criminals and says it is working with law enforcement to freeze proceeds from illegal activity.

In addition, Warren wants Lutnick, co-chair of the Trump transition team, to describe any discussions he has had with new administration officials about Tether. She also noted that Lutnick maintains a personal relationship with his company (his two sons work at Cantor Fitzgerald Group) and is concerned that Lutnick could continue to exert control after divesting his holdings. (Bloomberg)