These are interesting times for Tether. The world’s most traded cryptocurrency has also become the top choice of international criminals and others looking to make cross-border transactions out of sight of the mainstream global financial system.
As a result, Tether is attracting scrutiny from law enforcement agencies in the U.S. and EU. Meanwhile, Tether has garnered a significant investment from Wall Street titan Cantor Fitzgerald and its CEO, Howard Lutnick, Donald Trump’s pick to be commerce secretary, raising questions about potential conflicts of interest.
Key Takeaways
- With a market cap of $138 billion, Tether has become the world’s largest and most important stablecoin—and a favorite of international criminals looking to hide illegal transactions and launder money.
- Tether’s investors include Wall Street giant Cantor Fitzgerald, which is led by CEO Howard Lutnick, Donald Trump’s pick for secretary of commerce.
- Regulators in the U.S. are investigating Tether for possible violations of sanctions and anti-money laundering regulations.
- Tether’s growing financial and political influence will present unique challenges for regulators and law enforcement going forward, and its enormous size has created concerns about systemic risk.
What Is Tether and How Does it Work?
Tether was founded in 2014 by an Italian former plastic surgeon, Giancarlo Devasini, who had earlier helped develop crypto exchange Bitfinex, and American Brock Pierce, an entrepreneur who had previously co-founded Realcoin and has ties to Steve Bannon, a former White House adviser to Donald Trump.
Tether revolutionized cryptocurrency trading by offering a stable digital asset whose value is pegged to the U.S. dollar. This dollar peg is maintained through reserves that include U.S. Treasury bills, gold, Bitcoin, and various other assets.
Tether is now the world’s most traded cryptocurrency, and its market capitalization has grown from just a few billion dollars in 2019 to $138 billion in January 2025.
Why Some Criminals Like Tether
Despite its clear legitimate uses, Tether has come under increasing regulatory scrutiny, as it can also allow bad actors to move money around surreptitiously. According to a UN report from January 2024, USDT has emerged as a “preferred choice” for crime syndicates, allegedly facilitating some $17 billion in illegal trades.
The stablecoin’s appeal to criminals stems from its liquidity, relative anonymity, and ease of moving large sums across borders without traditional banking oversight. Drug cartels, sanctioned entities, and even terrorist organizations have reportedly used USDT to evade financial controls.
While Bitcoin and other cryptocurrency transactions are recorded on public blockchains and can often be traced back to users (with enough resources and expertise), Tether transactions typically take place on exchanges or platforms with less stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance. This creates opportunities for illicit transactions.
Howard Lutnick’s Tether Stake and Political Implications
Cantor Fitzgerald 5% stake in Tether, valued at about $600 million, has raised eyebrows in financial and political circles. Lutnick has emerged as a powerful ally. His firm currently manages much of Tether’s claimed billions in Treasury bills, earning substantial fees in the process.
Lutnick’s roles as Trump’s transition team co-chair and, if confirmed, secretary of commerce, has sparked concerns about potential conflicts of interest, especially given investigations into the use of Tether by bad actors.
The Moral Hazard of Tether’s Growth
Tether is mostly used for legitimate applications such as facilitating cryptocurrency and token trading, providing liquidity, and offering a stable store of digital value. This activity drives Tether’s rapid adoption across global markets and its integration into mainstream financial channels.
Because of this, some experts warn that Tether’s continued expansion could pose significant risks. Some scholars suggest that Tether has become “too big to fail” within the crypto ecosystem, and its collapse could spark contagion beyond digital assets.
Tether’s resistance to comprehensive audits, combined with the company’s growing influence in various sectors—including investments in artificial intelligence and video platforms—raises further questions about prudent financial management, systemic risk, and regulatory oversight.
The Bottom Line
Tether’s upward trajectory demonstrates both the promise and perils of cryptocurrency innovation. While it has become an integral part of the digital asset infrastructure, its growing size, regulatory challenges, and potential political entanglements create a complex web of risks and concerns, highlighting the increasingly blurred lines between traditional finance, cryptocurrency, and political power.
