Democratic Senator Elizabeth Warren has launched a direct attack on Howard Lutnick, President Donald Trump’s nominee for Commerce Secretary, demanding answers about his ties to stablecoin issuer Tether, according to a Jan. 28 report by Bloomberg.
Elizabeth, a longtime proud crypto hater, sent a letter to Howard today, questioning how much he and his firm, Cantor Fitzgerald, have invested in the stablecoin issuer.
Bloomberg claims to have obtained a copy of the letter, in which Elizabeth also asks Howard to disclose any due diligence Cantor Fitzgerald conducted before partnering with Tether.
She specifically wants to know if the firm made sure that Tether complied with US anti-money laundering laws, international sanctions, and “know your customer” regulations under the Bank Secrecy Act.
Elizabeth framed the issue as a potential threat to national security, arguing that Tether’s involvement in illicit transactions makes Howard’s ties to the company a major red flag.
Elizabeth questions Howard’s disclosure, Cantor’s Tether dealings
Howard, a billionaire Wall Street executive, had already submitted a financial disclosure form listing assets worth at least $806 million. The document detailed his involvement in over 800 legal entities but made no mention of Tether or any other crypto holdings.
Elizabeth is pressing Howard to explain why Tether wasn’t listed in his financial documents. She also wants to know if his promise to divest from Cantor Fitzgerald, should he be confirmed, is enough to eliminate conflicts of interest.
“Your deep entanglements with Tether raise significant questions about your personal judgment and whether you can serve without bias,” she wrote in the letter.
Cantor Fitzgerald has reportedly earned tens of millions of dollars from Tether for managing its reserves. According to the Bloomberg report, the brokerage firm also bought a minority stake in Tether. Elizabeth and other critics think that Tether’s operations enable illicit transactions, including money laundering and sanctions evasion.
Tether has dealt with a lot of widespread scrutiny for its lack of transparency, even within the crypto community. Its dollar-backed stablecoin USDT has been linked to criminal enterprises all over the world.
US officials have cited cases of Mexican drug cartels, human traffickers in Southeast Asia, and even the North Korean government using Tether to move funds undetected. Just last December, US authorities accused Russia of using Tether to sidestep sanctions and finance its war in Ukraine.
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Howard’s nomination was one more crypto-friendly face in Trump’s inner circle. If confirmed, he would have a seat at the table, serving in Trump’s working group for crypto policy. Elizabeth claims she is concerned that Howard’s deep ties to Tether will sway his decisions in favor of the industry.
She has long viewed crypto as a financial loophole for criminals, and Tether has been a primary target of her crackdown efforts. But the crypto community sees Elizabeth’s letter as an attempt to undermine a pro-crypto nominee before he can take office.
She did the same thing to pro-crypto Treasury Secretary Scott Bessent during his own hearing earlier this month. Scott got confirmed yesterday though, in spite of her efforts, as Cryptopolitan reported.
While Elizabeth targets Howard, Tether is in the process of relocating its corporate headquarters and subsidiaries to El Salvador after securing a digital asset service provider license from the Central American nation.
The decision allows Tether to operate in a jurisdiction that has fully embraced Bitcoin and made it a part of day to day. Paolo Ardoino, Tether’s CEO, called the decision a “natural progression” for the company, which has supported El Salvador’s efforts to become a global crypto hub.
The El Salvador government currently holds over $600 million in Bitcoin and has positioned itself as a haven for crypto entrepreneurs. Tether’s relocation follows years of legal battles in the US. In 2021 for instance, the company agreed to pay $41 million to settle allegations that it misrepresented its reserves.
Tether has not confirmed whether it will set up a physical office in El Salvador or if it will retain any operations in the British Virgin Islands, where it was previously registered.
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