These days, Tether is making headlines not just for its staggering trading volume, but for an entirely different reason—it’s fast becoming the cryptocurrency of choice for those skirting the edges of legality. International criminal networks and others operating outside the traditional financial system have embraced Tether’s blend of liquidity, stability, and anonymity for cross-border transactions.

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Tether Under the Spotlight

Unsurprisingly, law enforcement agencies in both the U.S. and EU have taken notice. Tether’s immense popularity and its potential misuse have drawn scrutiny from regulators and investigators alike. At the same time, Tether has garnered substantial backing from mainstream financial players. One notable example: Cantor Fitzgerald, the Wall Street heavyweight, invested heavily in Tether, with CEO Howard Lutnick—Donald Trump’s pick for commerce secretary—playing a key role. The intersection of Lutnick’s political connections and his company’s Tether stake has raised eyebrows, sparking concerns about potential conflicts of interest.

What Is Tether and Why Does It Matter?

Tether, launched in 2014 by Giancarlo Devasini and Brock Pierce, was created as a “stablecoin”—a cryptocurrency designed to maintain a one-to-one peg with the U.S. dollar. This stability is achieved through a mix of reserves, including U.S. Treasury bills, gold, Bitcoin, and other assets. By offering a dollar-pegged digital asset, Tether has revolutionized cryptocurrency trading, enabling traders to move funds quickly and reliably without exposure to the volatility of traditional cryptocurrencies like Bitcoin.

Today, Tether stands as the most traded cryptocurrency on the planet, boasting a market capitalization that skyrocketed from a few billion dollars in 2019 to $138 billion by January 2025. It has become an indispensable tool in the cryptocurrency world, providing liquidity and serving as a digital bridge between fiat and other cryptocurrencies.

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The Dark Side of Tether’s Popularity

Despite its legitimate applications, Tether has found a following among less savory actors. According to a 2024 UN report, Tether’s USDT token has become the “preferred choice” for international crime syndicates, facilitating an estimated $17 billion in illicit transactions. This includes uses by drug cartels, sanctioned entities, and even terrorist organizations seeking to evade traditional financial controls.

What makes Tether so appealing to these groups? Primarily, its high liquidity, the relative anonymity it offers, and the ease of transferring large sums across borders without triggering the alarms that traditional banks might set off.

The Lutnick Connection and Political Concerns

Cantor Fitzgerald’s $600 million stake in Tether—amounting to a 5% share—has only fueled the fire. Not only does Cantor manage much of Tether’s reported billions in Treasury holdings, but the firm also earns substantial fees from this relationship. Meanwhile, Howard Lutnick’s dual roles—as Cantor’s CEO and a Trump-aligned political figure—have drawn criticism. His pending confirmation as commerce secretary only intensifies concerns about how Tether’s financial dealings might intersect with political influence.

A Growing Moral Hazard

Tether’s role in the global cryptocurrency ecosystem is enormous. On the surface, its primary use cases—facilitating crypto trading, providing liquidity, and offering a stable digital store of value—are all legitimate. But as Tether grows larger, its risks become harder to ignore. Some experts have warned that Tether is becoming “too big to fail,” and any major disruption in its operations could send shockwaves throughout not just the cryptocurrency markets but potentially the broader financial system.

Compounding these concerns is Tether’s opaque financial structure. The company has resisted comprehensive audits, and its growing influence in sectors like artificial intelligence and media raises additional questions about its transparency and regulatory compliance. Could Tether’s continued expansion lead to systemic risks? And if Tether falters, what kind of contagion could it unleash?

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Conclusion

In a financial world where innovation often outpaces regulation, Tether stands as a double-edged sword—simultaneously a groundbreaking financial tool and a lightning rod for controversy. Its growth has streamlined cryptocurrency trading and unlocked new financial possibilities, but it has also opened doors to misuse and raised concerns about transparency, governance, and systemic risks. As Tether’s role in the digital asset ecosystem continues to expand, the need for responsible oversight and greater accountability grows ever more critical. Only by addressing these challenges head-on can the broader financial community fully realize the benefits of Tether’s innovation while safeguarding against its potential dangers.