A Senate inquiry and ensuing correspondence center on Tether’s USDT and its commercial ties to Cantor Fitzgerald, as detailed in Democratic Senator Richard Blumenthal’s staff report titled “Tethered to Terrorism.” The staff review examined 846 wallets designated by the U.S. Treasury’s OFAC and Israel’s National Bureau for Counter Terror Financing across June 2021 to August 2026, finding that 84% of those flagged addresses relied heavily on USDT. The split in designations showed 87% USDT reliance among Israel-flagged wallets and 57% among OFAC-designated wallets.
The report highlights two sanctioned Iranian oil smugglers who, according to the staff analysis, moved more than $603 million in USDT through networks linked to Hezbollah and Houthi factions. Those findings prompted Blumenthal to ask Treasury Secretary Scott Bessent and Attorney General Todd Blanche to open inquiries into Tether’s sanctions compliance and anti-money laundering practices. The senator’s office also pressed Cantor Fitzgerald for records about its business with Tether, citing concerns about a potential conflict of interest arising from Cantor’s dual role as a 5% equity holder and a custodian of substantial portions of Tether’s U.S. reserves.
Blumenthal’s letter, addressed to Cantor chairman Brandon Lutnick and dated October 8, requests detailed information on annual revenue from Tether, the value and terms of Cantor’s ownership interest, reserve custody arrangements, audits, sanctions practices and communications involving Howard Lutnick, including after he left Cantor. The letter estimates Cantor’s 5% stake could be worth about $10 billion, and it seeks records on distributions and any financing that facilitated divestiture to Lutnick’s children. The senator set an October 23 deadline for responses and asked Cantor to preserve relevant records.
Tether’s public response emphasizes cooperation with law enforcement and cites roughly $550 million in Iran-linked USDT that it says was frozen in 2026, including actions in April and July involving hundreds of millions of dollars. The materials make a central distinction: a reserve custodian can see and safeguard Treasury securities and cash, while an issuer like Tether can monitor onchain flows and exercise administrative controls to freeze specific token addresses. Those functions provide different information and different operational capabilities, so Cantor’s custody of reserve assets does not by itself demonstrate visibility into or control over individual onchain transfers.
The inquiry does not itself allege Cantor broke the law; it is a document request and a preservation notice aimed at clarifying contractual arrangements, monitoring practices and escalation processes. Key unresolved questions include which assets Cantor actually holds, under what instructions it acts, what due diligence it performed on Tether, how and when Tether implemented freezes, and whether any internal notices or designations were available to Cantor before disputed transfers. The Senate’s request and Tether’s freeze disclosures set up a fact-finding phase: whether additional government investigations follow, what Cantor produces by October 23, and how auditors, regulators and law enforcement reconcile reserve attestations with onchain enforcement actions.