FameEX Hot Topics | Tether’s $5B Minting and Political Links Raise Industry Concerns

Tether, the leading stablecoin by market capitalization, has once again made headlines with a remarkable $5 billion minting spree completed within just 72 hours. This significant increase in supply has reaffirmed Tether’s role as a cornerstone of market liquidity but has also raised concerns among financial experts. Howard Lutnick, CEO of Cantor Fitzgerald and a key figure in Donald Trump’s transition team, has emerged as a central player in these developments.

In recent months, Lutnick has been a vocal defender of Tether’s financial stability. His public support aligns with Trump’s decision to nominate him as Secretary of Commerce, creating speculation about the potential overlap between politics and cryptocurrency regulation. Meanwhile, the US Attorney’s Office for the Southern District of New York is investigating Tether for alleged illicit activities, including possible links to terrorism financing. Cantor Fitzgerald’s role as a vital banking partner for Tether has only added to the scrutiny, particularly as many global banks have distanced themselves from the stablecoin issuer.

Blockchain analytics from SpotOnChain shed light on the timing of Tether’s recent issuances. On November 6, Tether minted $1 billion, coinciding with Bitcoin reaching a record high of $76,200. Over the following days, another $4 billion was issued in two tranches, propelling Bitcoin’s price above $80,000. By the end of this five-day spree, Tether’s market cap had risen to $124 billion and later increased to $132 billion at the time of reporting, solidifying its dominance in the stablecoin sector.

Despite Lutnick’s public endorsements of Tether’s reserves, his claims to have reviewed parts of its balance sheet lack concrete evidence. This absence of transparency has fueled skepticism about Tether’s practices and its impact on the cryptocurrency ecosystem. Critics argue that such opacity undermines confidence in the broader market.

Further complicating matters, a Wall Street Journal report revealed that Cantor Fitzgerald now holds a 5% stake in Tether, valued at approximately $600 million. This financial relationship is viewed by some as a pathway to stronger political support from the incoming Trump administration, deepening concerns about the intersection of business and politics in the crypto space.

Lutnick has also stated his intention to vet candidates for government positions that could oversee Tether. If confirmed as Commerce Secretary, he plans to resign as CEO of Cantor Fitzgerald but may assume a different role. His criticism of Federal Reserve policies contrasts with his silence on Tether’s opaque operations, intensifying the controversy surrounding his involvement.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.