Key Highlights:
- Senate investigators led by Senator Richard Blumenthal are probing Cantor Fitzgerald’s financial ties to Tether, citing potential national security risks linked to sanctioned actors.
- A Senate Subcommittee review discovered that 84% of 846 sanctioned, Iran-linked cryptocurrency wallets transacted almost entirely using Tether’s $USDT stablecoin.
- Tether CEO Paolo Ardoino defended the firm’s compliance record, noting cooperation with global law enforcement to freeze more than $4.9 billion in illicit assets to date.
Senate Inquiry Targets Cantor Fitzgerald Over Tether Reserves and Sanctions Oversight
Financial services firm Cantor Fitzgerald is facing heightened congressional scrutiny regarding its deep commercial and custodial relationship with Tether, the issuer behind the world’s largest stablecoin, $USDT. In 2024, Cantor secured an arrangement granting it a 5% equity stake in Tether, alongside managing the custody of tens of billions of dollars’ worth of Tether’s U.S. Treasury bills. According to Senator Richard Blumenthal, Cantor’s stake in Tether has surged in value from $600 million to approximately $10 billion since Donald Trump took office again. Because U.S. Treasury bills serve as the primary reserve assets backing USDT’s one-to-one dollar peg, Blumenthal’s investigation aims to establish the extent of Cantor’s operational oversight and evaluate whether the financial institution took adequate measures to mitigate pressing compliance risks.
The Senate inquiry argues that Cantor Fitzgerald’s lucrative partnership with the stablecoin issuer presents severe risks to U.S. national security. In a formal letter, Blumenthal stated that Cantor must provide an exhaustive accounting of all steps taken to probe allegations linking Tether to financial crimes. Specifically, the inquiry focuses on $USDT’s alleged utilization in evading Russian economic sanctions and facilitating transactions across Iran’s parallel banking network. Senator Blumenthal emphasized Cantor’s financial incentive in the arrangement, stating: “Just as Tether has made untold millions in interest and investments from the stablecoins used in these illicit activities, so has Cantor Fitzgerald profited from its relationship with Tether.”
Findings Detail High Concentration of $USDT in Sanctioned Digital Wallets
Central to the Senate Subcommittee’s findings is evidence indicating that Tether left specific digital wallets active despite clear signs that they were moving or receiving substantial capital linked to illicit actors and terrorist financing networks. Most notably, congressional investigators discovered that 84% of the 846 Iran-linked digital wallets subject to sanctions transacted almost entirely in $USDT. In response to the documented findings, Blumenthal has formally requested that both the U.S. Department of the Treasury and the Department of Justice launch deeper investigations to establish whether formal sanctions violations occurred.
While stablecoins allow global users to transfer dollar-denominated value without direct dependence on standard banking rails, this permissionless design presents substantial challenges for regulatory and sanctions enforcement. Although blockchain transactions remain publicly verifiable on-chain, definitively unmasking the beneficial owners behind specific addresses and identifying active sanctions evasion requires extensive investigative coordination. Consequently, the Senate inquiry is centered on determining whether Cantor Fitzgerald conducted sufficient due diligence regarding these illicit financing vulnerabilities while expanding its commercial footprint with Tether.
Tether Leadership Defends Law Enforcement Cooperation Amid Mounting Scrutiny
Despite the findings highlighted by lawmakers, Tether has maintained that it aggressively combats illicit activity and consistently cooperates with global authorities. The stablecoin issuer noted that it had previously frozen nearly $550 million in $USDT tied to Iranian activity within the year. Rejecting allegations that the token facilitates crime unchecked, Tether CEO Paolo Ardoino stated: “Tether has consistently demonstrated that $USDT is not a haven for sanctioned actors, terrorist organizations, or criminal networks.”
Paolo Ardoino emphasized that Tether has assisted law enforcement bodies around the world in freezing more than $4.9 billion in total assets, which includes more than $2.4 billion frozen in coordination with U.S. agencies alone. Highlighting this track record, Ardoino added: “The record is public: the DOJ, FBI, Secret Service, HSI, OFAC, and authorities around the world have repeatedly worked with Tether to trace, freeze, and recover assets. We will continue to make that capability available to authorities working to stop terrorism, sanctions evasion, fraud, and other serious crimes.”
The broader landscape surrounding Tether’s asset freezing practices has also generated legal conflict. Last year, Tether froze $42.4 million in USDt associated with Thai business executives. The individuals filed a lawsuit against Tether, alleging that the company froze their funds in October 2025 without a formal warrant following an informal inquiry from U.S. Homeland Security Investigations (HSI). U.S. authorities in the Eastern District of North Carolina subsequently secured a warrant in February 2026 to seize the assets as part of a $61 million pig-butchering fraud probe, demanding the original tokens be burned and reissued to a government-controlled wallet. The Thai plaintiffs have strongly contested the underlying allegations, denying all criminal wrongdoing.
Why This Matters
The probe into Cantor Fitzgerald highlights the intensifying intersection between traditional Wall Street institutions and offshore cryptocurrency firms. As institutional custodians hold massive amounts of U.S. sovereign debt to back stablecoins, federal lawmakers are questioning whether custodial banks bear liability for the illicit flows moving through those stablecoin protocols. Moving forward, the calls for Treasury and Justice Department reviews could trigger stricter anti-money laundering (AML) and Counter-Terrorist Financing (CTF) oversight on traditional financial intermediaries holding reserves for non-bank stablecoin issuers.
Frequently Asked Questions
What is Cantor Fitzgerald’s connection to Tether?
In 2024, Cantor Fitzgerald acquired a 5% stake in Tether and manages the custody of tens of billions of dollars in U.S. Treasury bills that serve as reserve assets maintaining USDT’s dollar peg.
What did the Senate Subcommittee discover regarding sanctioned wallets?
Congressional investigators found that Tether failed to promptly freeze multiple wallets handling illicit capital, and that 84% of 846 sanctioned cryptocurrency wallets associated with Iran conducted their activity almost entirely in $USDT.
How has Tether responded to the allegations of illicit activity?
Tether CEO Paolo Ardoino defended the company’s track record, stating that Tether has frozen nearly $550 million in Iran-linked assets this year and has worked directly with international and U.S. agencies to freeze over $4.9 billion in illicit assets overall.
