Tether’s Secret Connections
Date: 2024-11-28 Author: Gabriel Deangelo Categories: BUSINESS
Tether, the largest stablecoin issuer, has once again found itself in the spotlight after issuing over $5 billion in 72 hours. The move has caused excitement among crypto enthusiasts and financial circles alike, given Tether’s key role in providing liquidity to the market.
At the center of the action is Howard Lutnick, the CEO of Cantor Fitzgerald and an active member of Donald Trump’s transition team. Lutnick’s recent statements in support of Tether’s stability coincide with his nomination for the post of US Secretary of Commerce.
Meanwhile, the US Attorney’s Office for the Southern District of New York continues to investigate possible illegal activities related to Tether, including suspicions of terrorist financing. Against this backdrop, Cantor Fitzgerald has become an important banking partner for Tether, despite many international banks refusing to work with the issuer.
Analysis by SpotOnChain shows that Tether issued $1 billion on November 6, which coincided with Bitcoin’s price rising to $76,200. Another $2 billion was issued on November 9 and 10, helping Bitcoin surpass $80,000. The latest issue added another $2 billion, bringing the total volume to $5 billion in five days.
This has pushed Tether’s market cap to $132 billion, cementing its status as a leading stablecoin. As a dollar-pegged asset, Tether continues to provide liquidity on centralized and decentralized exchanges, reaching a daily trading volume of about $289 billion.
The expansion of the supply correlates with market optimism: USDT supply growth has historically been accompanied by increases in the price of major cryptocurrencies, including Bitcoin, which is approaching $100,000.
Latnick’s involvement in Tether has been met with mixed reviews. Despite publicly supporting Tether’s reserves and claiming to be auditing part of the company’s balance sheet, he has not provided any hard evidence to back up these claims.
Additionally, Cantor Fitzgerald now owns 5% of Tether, worth about $600 million. This could bolster the Trump administration’s political support for the company. Latnick has also stated that if confirmed as Secretary, he will step down as the head of Cantor Fitzgerald but may take on another role.
His long-standing criticism of the Federal Reserve’s policies makes his silence on Tether’s opaque practices particularly notable.
Opinions are divided on Latnick’s involvement and the future of Tether, with some arguing that working with traditional financial partners bolsters trust in the stablecoin. Others, like Zignaly CEO Abdul Rafai Gadit, emphasize the need for transparency to maintain trust in the face of increasing regulation.
In 2021, the U.S. Commodity Futures Trading Commission (CFTC) fined Tether $41 million for falsely claiming its reserves. That same year, Bitfinex settled a lawsuit with the New York Attorney General’s Office for $18.5 million for concealing financial losses.
Despite this, Tether’s share of the stablecoin market continues to grow, reaching 75%. However, many believe that periodic reports from auditors like BDO Italia are sufficient to confirm the company’s stability.
