Home > News > Business > Tether’s Treasury Bill Manager Blends Cryptocurrency and Politics
The Wall Street titan, who reportedly controls Tether’s Treasury bills, is reportedly being considered as a chief of staff candidate under the second Donald Trump administration, as Tether’s That could spell trouble for stablecoin rival Circle.
On October 22nd, Politico reported on possible names for President Trump’s chief of staff should he assume the White House in January for his second term. Among the names being bandied about is Howard Lutnick, co-chair of President Trump’s transition team and chairman and CEO of financial services firm Cantor Fitzgerald (NASDAQ:ZCFITX). .
Mr. Lutnick is reportedly the front-runner for the position, but the article prompted a second Politico report the next day, in which an anonymous “Trump associate” accused Mr. Lutnick of having “business interests.” and “inappropriately conflating duties supporting a potential (Trump) administration.” Lutnick reportedly intends to sideline some of Trump’s longtime aides and bring in “new talent that could be of personal benefit to (Lutnick).”
Lutnick is said to have discussed regulatory issues affecting Cantor’s business interests during what was supposed to be a meeting with lawmakers at the Capitol focused purely on the transition. The report notes that among the interests Lutnick allegedly discussed was a relationship with Tether, the issuer of USDT, the largest stablecoin by market capitalization.
Several stablecoin bills are floating in both chambers of Congress, and any of them could be debated in the post-election lame-duck session. But unless it is attached to a larger bill that must be passed by midnight on the last day of the session (which has happened before), the stablecoin debate could be pushed into next year. At this point, Trump may once again become the primary occupier at 1600 Pennsylvania Avenue.
This raises concerns about the intersection between Lutnick’s ties to Tether and his role in recruiting the new Trump administration. Richard Painter, an ethics lawyer who worked for President George W. Bush, told Politico: “I think it’s a recipe for trouble when people in the crypto industry choose financial regulators.”
Given the benefits the bill gives to the appalling “payments stablecoin” language, which most observers interpret as favoring Circle’s USDC over Tether’s USDT, Lutnick said: I don’t think I’ll be watching the current efforts to pass stablecoin legislation indifferently.
Mr. Lutnick’s Capitol Hill Cryptocurrency Cheerleading and Long-standing Relationship with Mr. Trump Could Avoid USDC-Friendly Laws, Tether Criminal Prosecution, and/or Seizure of Assets Allegedly Under Canter’s Control It remains to be seen whether this will prove sufficient.
There can only be one
Although USDT’s market cap ($120.1 billion) looks small compared to USDC’s market cap ($34.3 billion), USDC has won most of its regulatory battles (and garnered positive PR in the process). Masu). This summer, USDC became the first stablecoin to be approved under the European Union’s Market for Cryptoassets (MiCA) regulatory framework.
Tether has publicly criticized MiCA’s rules, particularly the requirement that EU banks hold 60% of fiat reserves, as injecting additional risk into the stablecoin sector. Critics say that given Tether’s sketchy history (the United Nations recently called USDT a “criminal coin” that facilitates all sorts of grossly illegal activities), Tether is not subject to the kind of scrutiny that traditional banks require of their customers. countered that this meant that the accounts could not be made public.
Tether has never submitted its billions of dollars in fiat reserves, mostly held in U.S. Treasury bills, to an independent third-party audit. Circle has also never submitted to an independent audit, but Circle has made public the CUSIP numbers of the Treasury bills included in its reserves, a tentative step toward transparency that Tether has yet to achieve. .
To date, the only confirmation of Tether’s T-bill stash has come through quarterly “certifications” carried out by BDO Italia. But these reports are only based on a single-day snapshot of Tether’s finances, with no information about what those accounts were doing the previous day or the next day.
Tether was previously caught red-handed playing an in-out game of assets to hide huge losses by its sister company (Bitfinex digital asset exchange), so I’m willing to take Tether’s word that all is well. Few impartial observers attempt to do so. .
This is where Lutnick/Kanter comes into play. In February 2023, the Wall Street Journal first suggested that Kantar was “helping” Tether store its short-term treasury securities. In December of that year, Mr. Lutnick told CNBC that he was a “huge fan” of Tether and claimed that “I own their treasure,” although “I” clearly belonged to Mr. Cantor. That seems to be what you’re referring to.
Since then, Lutnick has publicly touted Cantor’s Tether partnership at almost every opportunity. At the annual BTC conference in Atlanta this summer, Lutnick told attendees that Tether gave Kantar “full access to due diligence to confirm and prove that the funds are there.”
That’s all well and good, but accepting Lutnick’s assertions as gospel reverses the crypto sector’s popular mantra of “trust, never verify.” So how well can Tether get around this problem?
Love, war and stablecoins are all fair
Belatedly realizing over the past year that American law enforcement’s patience was wearing thin, Tether toned down its standard rhetoric of “your laws don’t apply to us” and pushed for compliance. I favored making a token gesture towards the person. Hardly a day goes by these days that Tether CEO Paolo Ardoino doesn’t offer some variation of the phrase “Look, there’s nothing illegal” in his public remarks.
As promised, Ardoino appeared (sort of) at DC Fintech Week’s conference fab in Washington this week, and with a straight face, claimed that Tether has “always been driven by compliance.” It’s my understanding that it never looked that way publicly, at least in the United States, and never looked that way. ”
Once he got going, Ardoino proved unable to stop himself, saying, “It’s hard to find another financial company that can match the level of law enforcement cooperation and number of agency relationships that Tether has. It will be difficult,” he said.
(Yet, for some reason, the well-travelled Mr. Ardoino chose to give his Washington, D.C., address in a video rather than appear in court in person.) This suggests that there remains some doubt as to whether an indictment naming him exists.
Ardoino lamented the lack of crypto-specific laws and regulations in the United States, but said that regardless of whether President Trump or his opponent Kamala Harris wins in November, “crypto regulation, smart crypto It is very, very important that currency regulation and stablecoin regulation be implemented in the United States.” It’s a way to protect end users. ”
But if Trump doesn’t win in November, will the US stablecoin bill that protects end users also target Tether and Lutnic?
Please finish him!
Longtime digital asset watchers also say New York-based Kantar will be targeted by federal agency seeking to bring down Tether, which is avoiding the U.S., Circle executives said at a February House hearing. I was surprised to see comments that seemed to suggest that there was a possibility of overthrowing the government.
Without mentioning Tether by name, Caroline Hill, Circle’s senior director of global policy and regulatory strategy, said that “opaque so-called stablecoin issuers” have been linked to “terrorists, fentanyl manufacturers, terrorist organizations and nation-states. “It functions as a ‘welcome sign’ for support groups,” he testified. actors. ”
Hill did not mention Cantor by name, adding that Treasury officials “should have the appropriate authority to stay on top of” illegal stablecoin activity. Hill suggested that “touchpoints in the U.S., either through the traditional financial sector or through (crypto-asset service providers), should be responsible for facilitating the proliferation or presence of these non-compliant tokens.”
While Mr. Hill kept a low profile, Rep. Wiley Nickell (D-North Carolina) was less shy and publicly shamed Mr. Tesar and Mr. Cantor. Nickel said Kantar is “giving[Tether]access to the US dollar,” adding, “It is unacceptable that Kantar is enabling terrorist and other illegal activities around the world.”
In fact, as of October 24, Nickel is a well-funded pro-cryptocurrency political action committee that includes Circle’s USDC partner Coinbase (NASDAQ:COIN) exchange as a major donor. He received more than $116,000 in campaign funds from Fair Shake.
On October 22nd, Politico reported on FairShake’s impact on the 2024 election, claiming that “a wave of crypto-friendly lawmakers is threatening to bring down Congress.” Given that many of these lawmakers are clearly beholden to Fairshake, Coinbase, and Circle, a stablecoin bill that rewards USDC while punishing its rivals could find a smoother path to passage. Maybe.
Kui bono?
Exactly why Lutnick wanted to associate his company with Tether remains very unclear, given Tether’s role in fueling not just crime but the fraudulent wash transactions that underpin the entire “crypto” casino model. There are many questions. Simply put, without USDT-based market manipulation, BTC, ETH, and countless other major tokens would behave like meme coins that are here today and disappear after today.
This article is already too long to go into too much detail to speculate on Lutnick’s possible motives, but be sure to check out this Mariana Trench dig by the X-personality known as @Cryptadamist. Politico sources found their voice six weeks ago when he sounded the alarm about Lutnick’s role in Trump’s Cabinet picks.
The article cited Lutnick’s role on the Trump transition team and said, “The fact that American citizens are in control of the funds of offshore companies whose purpose is apparently to avoid criminal prosecution.” “It’s natural to have some concerns,” he said. Serving customers will likely mean who is in charge of the Justice Department, the military, etc. if Donald Trump is re-elected (sic).”
The article also mentions the many organized crime organizations that rely on USDT, so Tether “acts as an accounting system that allows supervillain performers to share bank accounts, and who can be identified at any given time.” You can track how much money you have in your account’ given the time. Howard Lutnick’s company, Cantor Fitzgerald, is the bank. ”
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