Howard Lutnick, the nominee for U.S. Commerce Secretary chosen by President Trump, faced intense questioning from lawmakers regarding his ties to Tether and the alleged misuse of its dollar stablecoin, USDT.

Scrutiny Over Tether’s Reserves and Audits

Tether’s USDT stablecoin and its reserves have been under scrutiny for years due to concerns about the company’s lack of professional audits. A primary allegation suggests that without proper audits, Tether could be concealing up to $19 billion in illicit activity.

In 2023, Republican lawmakers asked the Department of Justice to investigate whether Binance and Tether were facilitating terror financing. In 2024, U.S. investigators probed Tether’s operator over potential sanctions violations and money laundering breaches.

Tether and its CEO, Paolo Ardoino, have denied these allegations, claiming that no investigation is underway. The company publishes quarterly attestations to reassure users, but many observers consider these reports insufficient.

Lutnick’s Response to Senate Commerce Committee

During a Senate hearing, ranking Democrat Maria Cantwell pressed Lutnick on stablecoin audits. He responded by stating that “U.S. dollar stablecoins should be audited” and “completely backed by U.S. Treasuries, 100%.”

Cantwell also referenced allegations that Chinese, North Korean, and Russian criminal groups have used USDT for illicit transactions. In response, Lutnick argued that fiat currency remains the primary tool for bad actors and that innovators should not be blamed for the misuse of their technology.

“It’s like blaming Apple because criminals use Apple phones,”

Lutnick’s Nomination and Potential Conflict of Interest

President Trump selected Lutnick to serve as the next U.S. Commerce Secretary, pending Senate confirmation. In this role, he would focus on job creation and collaborate with Trump’s crypto council to shape digital asset policies.

Due to conflicts of interest, Lutnick agreed to depart Cantor Fitzgerald, which is a Tether custodian. He stated, “I will divest, I will sell all of my interests, my business interests, all of my assets, everything.”

Key Considerations for Investors

As the cryptocurrency market continues to evolve, it’s essential for investors to stay informed about the regulatory landscape and potential risks associated with stablecoins like USDT.

Some key takeaways for investors include:

  • Understand the differences between audited and unaudited stablecoins.
  • Be aware of the potential risks associated with unregulated stablecoins.
  • Stay up-to-date with regulatory developments and their impact on the cryptocurrency market.

    • Stay informed about the latest cryptocurrency news and trends on Global Crypto News.

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