US investment bank Cantor Fitzgerald is facing scrutiny from Senator Richard Blumenthal, the ranking Democrat on the Senate’s Permanent Subcommittee on Investigations, over its ties to stablecoin issuer Tether. In a letter sent Thursday, Blumenthal requested records detailing how Cantor monitors Tether’s compliance with banking and sanctions laws, as well as all communications involving Commerce Secretary Howard Lutnick about the partnership. The inquiry follows a report by Democratic investigators alleging that Tether’s USDt has become a key tool for Iran’s shadow banking network.
Cantor Fitzgerald acquired rights to a 5% stake in Tether in 2024 and reportedly custodies tens of billions of dollars in Tether’s US Treasury bill reserves. Blumenthal alleges that the value of Cantor’s stake increased from $600 million to $10 billion since Donald Trump returned to office, while Howard Lutnick received more than $250 million during that period, including a $192 million distribution from Cantor. Lutnick stepped down as chairman after being confirmed as commerce secretary in February 2025, naming his son Brandon as chairman. Tether responded by stating it has frozen nearly $550 million in Iran-linked USDT this year and works with law enforcement. Blumenthal has asked Cantor to respond by Oct. 23.
The investigation highlights growing regulatory friction between traditional financial institutions and crypto-native entities, particularly when political connections intersect with market participation. By targeting Cantor Fitzgerald, a major custodian of stablecoin reserves, the Senate subcommittee is scrutinizing the infrastructure layer that supports digital asset liquidity. The demand for records on compliance monitoring and audit independence suggests concerns that established banks may be prioritizing lucrative partnerships over rigorous adherence to sanctions laws, potentially exposing the broader financial system to illicit finance risks associated with stablecoins like USDT.
This probe underscores the complex governance challenges arising from family-owned firms transitioning leadership into public office roles. The specific focus on divestiture terms and financing arrangements indicates an effort to trace potential conflicts of interest or undisclosed benefits flowing from crypto partnerships to government officials. As institutional adoption of stablecoins expands, such inquiries may set precedents for how regulators view the separation between private profit motives in crypto custody and public duty obligations, increasing operational and reputational risks for banks deeply embedded in the digital asset ecosystem.
