Tether faces Senate probe as 2 lawmakers investigate Lutnick ties

A court filing alleges Tether influenced US stablecoin legislation through Howard Lutnick, the Commerce Secretary and former Cantor Fitzgerald CEO, prompting US senators to launch a probe into conflicts of interest surrounding the stablecoin issuer's lobbying activities.

"Tether leveraged its relationship with Lutnick to shape the stablecoin regulatory framework under development in Congress," the court filing states, alleging the company sought favorable treatment for its USDT token, which has a market cap exceeding $120 billion.

The probe, led by members of the Senate Banking Committee, targets potential conflicts involving Lutnick, who oversaw Cantor Fitzgerald's custody of Tether's US Treasury reserves before joining the Trump administration. Cantor Fitzgerald has served as a key intermediary between Tether and the traditional financial system, managing the stablecoin issuer's reserve assets and facilitating its access to US dollar banking infrastructure.

The investigation threatens to derail the stablecoin legislative push in Congress, which has been advancing along two tracks: the Lummis-Gillibrand Payment Stablecoin Act and the House's Stablecoin Innovation Act. Lawmakers are now demanding disclosures of communications between Tether, Lutnick, and Treasury officials during the drafting process. Any finding of improper influence could trigger stricter reserve transparency requirements, mandatory audits, and enhanced reporting standards for all stablecoin issuers operating in the US.

The allegations come as Tether faces mounting scrutiny on multiple fronts. Jack Mallers, the founder of Twenty One — a Bitcoin treasury firm backed by Tether — resigned as chief executive officer after just seven months, citing disagreements with the board over the company's strategic direction. Mallers had publicly questioned Twenty One's financial disclosures and Bitcoin acquisition strategy, raising further questions about Tether's corporate governance.

Tether has not yet responded to requests for comment on the court filing or the Senate probe. The company has previously maintained that its reserves are fully backed and that it complies with all applicable regulations. The Senate Banking Committee has scheduled a hearing on stablecoin oversight for September, where Lutnick's role in the legislative process is expected to be a central topic.

This article is for informational purposes only and does not constitute investment advice.