Amid concerns over Tether’s stablecoin reserves and its involvement in illegal finance, US lawmakers grilled Commerce Secretary nominee Howard Lutnick about his firm’s ties to the company.
US Senates Grill Howard Lutnick on Tether
During a Senate Commerce Committee hearing on his nomination, Democrat Sen. Maria Cantwell heavily scrutinized Lutnick and his firm, Cantor Fitzgerald, over their relationship with Tether. Notably, Cantor Fitzgerald has been a custodian for Tether since 2021.
On Wednesday, Lutnick was questioned about his stance on audits. He responded, “I believe stablecoins, US dollar stablecoins, should be audited and should be completely backed by U.S. Treasuries, 100%.”
Cantwell also asked if he supported a “robust audit process” that is more transparent than what exists today. “For sure,” Lutnick replied.
During the hearing, Cantwell raised concerns about Tether’s use in illegal finance, particularly by criminals in North Korea and Russia. Lutnick countered by stating that criminals also use the dollar and the euro, comparing the allegation to blaming “Apple because criminals use iPhones”.
Lutnick was also pressed about Donald Trump’s $TRUMP memecoin launch. When asked if he had advised Trump or his administration on the memecoin, he stated that he had not.
As the Trump administration’s nominee for Secretary of Commerce, Lutnick is tasked with forming a crypto working group that would be making recommendations for regulating digital assets.
Tether’s Tussle With CFTC and US Regulators
Tether has faced ongoing scrutiny over USDT, the largest stablecoin by market capitalization. Regulators, including the U.S. Commodity Futures Trading Commission (CFTC), have been investigating Tether over its reserves. Meanwhile, the company has consistently refuted the allegations.
The CFTC accused Tether of falsely claiming that it would undergo routine, professional audits to demonstrate that it maintained “100% reserves at all times,” even though its reserves were not audited. As a result, Tether paid a $41 million civil penalty and agreed to cease and desist from further violations of the Commodity Exchange Act.
Additionally, Tether and its sister exchange, Bitfinex, agreed to pay an $18.5 million fine to settle an investigation led by New York Attorney General Letitia James’ office. The probe alleged that the companies misled clients about liquidity issues, especially after the infamous 2016 Bitfinex hack.
Also Read: Tether Launches USDT0 to Expand Cross-chain Interoperability
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