Lutnick, Cantor Fitzgerald negotiated a 5% ownership stake in Tether: WSJ

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The Block2024/11/23 16:00

By:The Block

Quick Take Cantor, which holds most of Tether’s $133 billion in reserves, negotiated a 5% ownership interest in the stablecoin issuer within the past year, according to The Wall Street Journal.

Lutnick, Cantor Fitzgerald negotiated a 5% ownership stake in Tether: WSJ image 0

Cantor Fitzgerald CEO and majority owner Howard Lutnick served as a co-chair of President-elect Donald Trump’s transition team and was recently nominated for Commerce Secretary, which could mark a pro-crypto shift in U.S. policy.

Within the past year, Cantor deepened its ties with stablecoin issuer Tether by securing a deal for a 5% ownership stake that was valued at as much as $600 million, according to a new report from The Wall Street Journal citing "some of the business associates." That would value the stablecoin issuer at around $12 billion.

Tether’s leadership reportedly sees Lutnick as a pivotal ally in countering proposed legislation aimed at tightening oversight of offshore stablecoins like Tether's USDT.

"[Tether owner Giancarlo] Devasini said privately earlier this year that Lutnick will use his political clout to try to defuse threats facing Tether," the WSJ report said, citing business associates of both men. A spokesperson told WSJ that "Tether's relationship with Cantor is entirely professional, based on managing reserves. The claim that Lutnick’s involvement in a transition team somehow translates to influence over regulatory actions is laughable."

Tether's U.S. dollar-pegged USDT is the largest stablecoin by market cap. Cantor Fitzgerald holds most of Tether's $133 billion in assets in exchange for tens of millions of dollars of fees each year, people familiar with Cantor’s business told WSJ.

A criminal investigation is looking into whether Tether is being used by third parties for illicit activities such as terrorism and hacking, The Wall Street Journal reported last month . The Treasury Department has also been weighing sanctioning Tether because of the stablecoin’s use by U.S.-sanctioned people and groups, according to WSJ.

"As we told to WSJ there is no indication that Tether is under investigation. WSJ is regurgitating old noise," Tether Paolo CEO Ardoino said at the time. "Full stop."

Tether has grown significantly from soaring Treasury yields and has registered $7.7 billion in profit through the first nine months of the year, according to its latest attestation report.

Lutnick said Wednesday he will step down from his positions at Cantor, BGC and Newmark upon Senate confirmation.

"I intend to divest my interests in these companies to comply with U.S. government ethics rules and do not expect any arrangement which involves selling shares on the open market," he said in a statement.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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