Senate Democrat probes Cantor Fitzgerald over Tether ties and $250M Lutnick windfall

Senator Richard Blumenthal, the leading Democrat on the Permanent Subcommittee on Investigations, is pressing for information on the financial relationship between investment bank Cantor Fitzgerald and Tether, the world’s largest stablecoin provider. 

In a formal letter sent Thursday, he asked Cantor Chairman Brandon Lutnick to detail their oversight of Tether’s banking and sanctions compliance. He also sought all correspondence from Commerce Secretary Howard Lutnick regarding Tether, including communications after he stepped away from Cantor. Following his Senate confirmation last year, Howard Lutnick stepped down from the helm of Cantor, leaving his son to assume leadership. 

According to Senator Blumenthal, Cantor has reaped significant financial gains alongside Howard Lutnick in the past two years, thanks to its partnership with Tether. Lutnick reportedly made more than $250 million during that time, including a $192 million distribution from the firm.

Senate investigators connect Tether to some bad actors

In 2024, Cantor secured a deal granting it a 5% stake in Tether and now reportedly oversees the custody of tens of billions of dollars’ worth of the issuer’s U.S. Treasury bills. Blumenthal claims that Cantor’s investment in Tether has greatly appreciated, from $600 million to a staggering $10 billion since Trump took office again.

Cantor Fitzgerald’s role in Tether’s operations extends beyond its reported equity investment. USDT is designed to keep a one-to-one peg with the U.S. dollar, and Tether holds reserve assets to support the tokens in circulation.

U.S. Treasury bills constitute a significant portion of those reserves and are an important component of the stablecoin issuer’s financial infrastructure. Blumenthal’s investigation aims to understand the extent of Cantor’s oversight of the relationship and whether the bank did enough to mitigate compliance risks.

But he argues that Cantor Fitzgerald’s business relationship with Tether, while lucrative, jeopardizes U.S. national security. In his letter, he said the firm needs to detail all actions taken in its investigation of allegations linking Tether to financial crimes. The lawmaker particularly cited USDT’s ability to circumvent Russian sanctions and its integration into Iran’s parallel banking system.

Primarily, the Senate Subcommittee found that Tether had left wallets active despite clear indications that they were transferring or receiving substantial sums linked to terrorist financiers and other illicit actors. The findings showed that 84% of the 846 Iran-linked crypto wallets subject to sanctions had transacted almost entirely in USDT.

Following the report, Senator Blumenthal has even urged the Treasury and Justice departments to investigate further on whether sanctions had been breached. 

Stablecoins have become an important part of the cryptocurrency market because they allow users to transfer dollar-linked value without relying exclusively on traditional banking channels. However, the same accessibility can create challenges for sanctions enforcement when individuals or organizations use digital wallets to move funds across borders.

Blockchain transactions can be traced, but identifying the people behind particular wallets and determining whether a transaction violates sanctions can require further investigation. The Senate inquiry seeks to determine whether Cantor Fitzgerald adequately assessed these risks while maintaining its commercial relationship with Tether.

He also contended, “Just as Tether has made untold millions in interest and investments from the stablecoins used in these illicit activities, so has Cantor Fitzgerald profited from its relationship with Tether.” 

Tether insists that they are working with law enforcement to combat illicit activity

Nevertheless, Tether has previously maintained that it has cooperated with law enforcement for years and frozen almost $550 million in USDT linked to Iran this year.

“Tether has consistently demonstrated that USDT is not a haven for sanctioned actors, terrorist organizations, or criminal networks,” said Tether CEO Paolo Ardoino. 

In total, the executive said, the company had helped authorities worldwide freeze more than $4.9 billion in assets, including over $2.4 billion through cooperation with U.S. authorities. 

“The record is public: the DOJ, FBI, Secret Service, HSI, OFAC, and authorities around the world have repeatedly worked with Tether to trace, freeze, and recover assets. We will continue to make that capability available to authorities working to stop terrorism, sanctions evasion, fraud, and other serious crimes,” he added. 

Although Ardoino has defended Tether’s cooperation with law enforcement, the firm has faced several controversies. Last year, Tether froze $42.4 million in USDt linked to Thai businessmen.

The men, however, are now suing the firm, claiming that it froze their assets without a warrant in October 2025 at the informal request of U.S. Homeland Security Investigations. It was not until February 2026 that authorities in North Carolina’s Eastern District secured a warrant to seize the funds, as part of a $61 million case involving a pig-butchering scheme. The order called for the tokens to be burned and new ones issued to a government wallet. 

The plaintiffs have also flatly denied the government’s charges and have distanced themselves from any criminal conduct.