Trump's Second-Term Commerce Secretary Faces Controversy Over Collaboration with Cryptocurrency Firm Linked to Money Laundering

Cryptocurrency Company Tether Discusses Loan Business Expansion
"Tether Used for Money Laundering from Drug and Terrorism Funds"

It has been reported that the investment company of Howard Lutnick, co-chairman of the transition team for the second Donald Trump administration set to launch in January next year and nominee for Secretary of Commerce, is seeking to strengthen cooperation with the cryptocurrency firm Tether, which is under suspicion of money laundering, sparking controversy.

On the 24th (local time), Bloomberg News reported this citing anonymous sources.

Kanter Fitzgerald, the investment company where nominee Lutnick serves as CEO, announced a business model in July that lends funds to customers using Bitcoin as collateral. Kanter Fitzgerald plans to expand the loan scale from an initial $2 billion to hundreds of billions of dollars in the future, and in this regard, the company is discussing receiving support from Tether.

Tether is the issuer of 'USDT' (Tether), a type of stablecoin designed to maintain a fixed exchange value against currencies such as the US dollar or euro. With a daily trading volume of $190 billion, it has the highest trading volume among cryptocurrencies. To maintain the value peg of USDT, Tether sets tens of billions of dollars in US Treasury bonds as collateral, and Kanter Fitzgerald, led by nominee Lutnick, is responsible for the custody of these Treasury bonds, maintaining a close relationship.

The problem is that Tether is under investigation by US authorities for suspected involvement in money laundering, and future sanctions are anticipated. Currently, the US Southern District of New York is examining whether the stablecoins issued by Tether have been used by third parties to support illegal activities such as drug trafficking, terrorism, and hacking, or to launder funds obtained from such activities. The US Treasury Department is also reviewing measures to sanction Tether, as sanctioned individuals widely use Tether's stablecoins to circumvent sanctions.

Tether currently denies the allegations related to money laundering.