Rotating Door Scandal Exposed: Who is Tailoring a US Stablecoin Bill for Tether?

Original Authors: Anthony Cormier, David Kocieniewski, Annie Massa, Bloomberg

Original Translation: Saoirse, Foresight News

This event is regarded as a landmark moment for the crypto industry and marks the first legislative achievement in Trump's agenda to establish the US as the "global crypto capital."

One year ago this month, Trump signed the GENIUS Act into law at the White House East Room, witnessed by a group of lawmakers and industry executives. He called the bill a crucial step in integrating digital assets into the US mainstream financial system.

The Act established the first federal regulatory framework for stablecoins, aiming to rebuild confidence in this $300 billion market. It requires issuers to make accounts public and prevent financial fraud. It also plans to bring stablecoin issuers under US regulatory jurisdiction, regardless of where the company is incorporated, addressing a long-standing industry pain point: criminals, terrorist groups, and sanctions evaders using stablecoins to move funds.

However, numerous interviews and court documents reveal the behind-the-scenes negotiations: in the months before and after Trump's inauguration, his advisors Howard Lutnick and Bo Hines worked behind the scenes to weaken regulatory constraints, ultimately tilting the final bill in favor of Tether, the world's largest stablecoin issuer. Multiple sources involved in the consultations said that among Trump's inner circle, Lutnick and Hines had a decisive impact on the legislation's direction, with the final bill incorporating several provisions beneficial to Tether. Dozens of industry executives, lobbyists, and current and former US officials who provided information for this report spoke on condition of anonymity because they were not authorized to disclose negotiation details.

On July 18, 2025, Trump signed the GENIUS Act at the White House. He described the bill as a "major advance in cementing America's dominance in global finance and crypto technology." Photo: Al Drago/Bloomberg

Before being appointed Commerce Secretary in the Trump administration, Howard Lutnick was Chairman and CEO of Cantor Fitzgerald, the Wall Street investment bank that managed Tether's reserve assets. Congressional lobbying records, federal court filings, and a person familiar with the matter confirm that throughout 2024, Lutnick acted as Tether's crisis PR manager, quelling negative publicity and lobbying lawmakers to reject bills unfavorable to Tether.

After Trump took office, Bo Hines was tasked with finalizing the legislative push. This 29-year-old White House aide, a North Carolina native, crypto investor, and failed Republican congressional candidate in 2022 and 2024, described himself as the White House's "tough enforcer" for the bill. Three people familiar with the matter said that during the final stages of negotiation, Hines stated publicly that the provisions Tether was fighting for were non-negotiable "red lines" for the White House.

This report traces the complete legislative process, revealing previously undisclosed maneuvers: first by Howard Lutnick, then by Bo Hines navigating complex negotiations, that allowed Tether, which commands about 60% of the global stablecoin market, to secure favorable rules. The report also clearly demonstrates how this administration's policy-making is deeply intertwined with officials' personal financial interests. Both Hines and Lutnick obtained substantial rewards from Tether.

From 2024 until shortly after the GENIUS Act was enacted, over an 18-month period, Tether executives executed a series of business maneuvers:

• In April 2024, granted Howard Lutnick's financial firm an option to purchase billions of dollars worth of company equity for a mere $600 million. Tether's chairman told a business partner the deal price was "ridiculously low."
• In December 2024, invested $775 million in loss-making Rumble Inc. This streaming platform partnered with the company operating Trump's Truth Social platform, and several Trump allies were among its investors.
• In August 2025, hired Bo Hines as an executive, just one month after the bill was signed.
• In October 2025, provided a loan to a trust benefiting Howard Lutnick's children, who were then in the process of acquiring their father's multi-billion dollar business assets.

Under the federal ethics agreement all Cabinet officials must sign, Howard Lutnick had promised to divest his Cantor Fitzgerald holdings and recuse himself from all matters involving conflicts of interest. A Commerce Department spokesperson did not address the specifics of this article, only stating that Lutnick complied with his ethics agreement, divested all assets including those related to Tether, and "did not participate in any work related to the stablecoin provisions of the GENIUS Act."

Bo Hines did not respond to interview requests, and the White House also declined to comment.

Tether issued an official statement strongly denying any improper conduct in its lobbying activities with policymakers regarding stablecoin legislation. The company stated it has long communicated legally and transparently with regulators, lawmakers, and law enforcement, as do many other market participants. Tether also emphasized that the GENIUS Act does not contain special treatment for Tether and that the new rules apply uniformly to all stablecoin issuers wishing to operate under the framework.

The Act triggered intense lobbying across the financial industry, involving crypto exchanges, credit card companies, and community banks. But as the undisputed industry leader—the largest competitor is only half its size—Tether had the highest stakes in the 2025 legislative negotiations.

Since the Act took effect, Tether, registered in El Salvador, has continued to expand. The company launched a new compliant token for the US market, but its core product remains the world's most widely circulated stablecoin. Multiple industry research institutions and government data show that USDT has long been used by terrorists, North Korean hackers, and sanctioned entities in Iran and Russia. Under the provisions of the GENIUS Act, this core USDT token may permanently remain outside the direct jurisdiction of US regulators.

Several provisions in the final version of the GENIUS Act favor Tether, marking a significant departure from stablecoin regulatory proposals previously drafted by lawmakers. Stablecoins offer convenience and pseudo-anonymity: blockchain wallet addresses are permanently public, but the real identities of users cannot be directly traced.

Core Trump Aides Shaping Crypto Legislation

Between 2023 and 2024, bipartisan lawmakers drafted bills setting strict requirements: foreign stablecoin enterprises (e.g., Tether) wishing to do business in the US must undergo US regulatory review and implement full anti-money laundering protocols.

The GENIUS Act significantly relaxed these constraints. A clause critics call the "regulatory equivalence loophole" states that as long as the US Treasury Secretary determines El Salvador's regulatory standards are broadly equivalent to those of the US, Tether's USDT could fall under El Salvador's oversight. Tether plans to relocate its headquarters there. The specific rules for making this equivalence determination are still being drafted.

Another change narrows the liability boundaries for stablecoin issuers, known in the industry as the "DeFi loophole": issuers are not required to track the misuse of their tokens in secondary markets of decentralized finance. Users can bypass banks and exchanges, trading peer-to-peer directly on the blockchain without identity verification or explaining the purpose of their funds.

The Act also includes a three-year compliance grace period: stablecoin issuers entering the US market are not required to meet all compliance requirements immediately. During legislative negotiations, some Democratic lawmakers proposed shortening this to 18 months. People familiar with the matter said Tether insisted on keeping the three-year period, with Bo Hines stepping in at crucial moments to fight for it.

During negotiations, Bo Hines told various parties that Tether was vital to the White House and that Republicans should hold their ground. Three people familiar with the matter recounted Hines clearly stating that maintaining the three-year transition period was a non-negotiable red line.

Bo Hines, appointed by Trump as Executive Director of the President's Digital Asset Advisory Council, led the push to pass the GENIUS Act through Congress. Photo: Tierney L. Cross/Bloomberg

Many financial experts warn that these provisions could weaken America's ability to combat money laundering by criminals and sanctioned entities, while also hindering Trump's goal of establishing the US as a global digital currency leader.

Timothy Massad, former Assistant Treasury Secretary under the Obama administration, raised concerns: the regulatory loopholes could create an uneven playing field, with high compliance costs for US crypto firms and foreign issuers evading strict anti-money laundering rules, potentially harming the US dollar's global reserve currency status. Massad also served as Chairman of the Commodity Futures Trading Commission from 2014-2017.

"If we want the dollar to maintain its core global reserve currency status, we cannot allow terrorists, sanctioned individuals, and criminals to anonymously transfer dollar funds," Massad said.

Any currency carries a risk of illicit use. However, since launching USDT in 2014, Tether has faced ongoing questions about the adequacy of its user due diligence. Tether initially argued that being based overseas shielded it from what it called US "over-regulation." But its stance shifted later. In December 2023, Tether implemented rules to actively freeze wallets associated with individuals and entities on the US Treasury's sanctions list.

Investigative bodies have continuously gathered evidence showing USDT is used in fentanyl trafficking in Mexico and helping Russia evade sanctions. A January 2024 UN report identified USDT as the preferred tool for crypto money laundering syndicates in Southeast Asia. Two people familiar with the matter revealed that the Biden administration's National Security Council even discussed a potential blanket ban on Tether's token entering the US market in 2024.

Ultimately, the idea was shelved, with law enforcement citing the ability to track illicit funds involving USDT via on-chain transactions. Over time, federal law enforcement also acknowledged Tether's increased willingness to cooperate in freezing assets linked to crimes.

A Tether spokesperson responded: "The company has built a law enforcement cooperation mechanism that is among the most effective in the global financial sector." The company stated its commitment to combating financial crime and said the GENIUS Act would further strengthen these efforts.

Despite this, USDT continued to be frequently used by illicit groups throughout the legislative process and after the Act's passage.

Data from blockchain analytics firm Elliptic shows that in 2025, Iran's sanctioned central bank purchased $507 million worth of USDT. In July of the same year, the month Trump signed the Act, Elliptic detected nearly $2.5 billion in USDT flowing into wallets linked to several Russia-affiliated companies, which the US Treasury identified as facilitating cross-border channels for sanctions evasion.

This year alone, over $4 billion worth of USDT has circulated on black markets operated by Chinese fraud rings for crimes like pig butchering scams, impersonation fraud, and sextortion, according to Elliptic data.

Court records show that since July 2025, federal prosecutors across the US have filed dozens of lawsuits seeking to seize USDT involved, totaling at least $172 million.

Tether's circulating supply is more than double that of its top rival, Circle Internet Group Inc, but it employs less than half the staff, outsourcing much of its suspicious transaction analysis to third parties. Tether declined to reveal its compliance team size but stated it "routinely collaborates with over 67 jurisdictions and more than 340 law enforcement agencies globally to identify, freeze, and help recover assets linked to illegal activities."

A company spokesperson said: "This is not just a paper compliance commitment, but tangible, quantifiable collaboration that most traditional financial institutions would struggle to match."

Howard Lutnick's Lobbying Blueprint

Cantor Fitzgerald began managing Tether's reserve assets in 2021. By then, the investment bank executive had known Trump for decades. At that time, Trump had just finished his first term and was preparing for a political comeback. Tether was highly profitable but controversial in market perception. In 2024, Howard Lutnick was simultaneously working for Trump's campaign and Tether's interests.

Independent audits are crucial for convincing investors that a token has sufficient reserves, but Tether has never published a complete independent audit of its reserves. In 2021, Tether and its affiliated exchange paid $61 million to settle charges from federal regulators and the state of New York, who alleged Tether had misrepresented its reserve levels and misled investors; Tether admitted no wrongdoing in the settlement. The GENIUS Act requires stablecoin issuers to produce annual audits. Tether announced this year that it has hired an auditor but has not yet disclosed a timeline for releasing a full audit report.

Howard Lutnick (then Chairman and CEO of Cantor Fitzgerald) at the World Economic Forum in Davos, Switzerland, January 2024. Source: Bloomberg

As market doubts about Tether's reserves persisted, Howard Lutnick publicly defended the company. In January 2024, at the Davos forum, he stated on Bloomberg TV: "They have the reserves they claim to have."

The following month, Lutnick traveled to El Salvador, meeting with Tether Chairman Giancarlo Devasini and the country's pro-crypto President Nayib Bukele, who calls himself the "coolest dictator in the world." Afterwards, Tether officially announced its intention to move its headquarters to San Salvador.

In April 2024, Cantor Fitzgerald spent $600 million on convertible notes giving it the right to acquire a 5% stake in Tether. This deal was not disclosed until November 2024, after Trump's election victory. Evaluated against Tether's own financials, the transaction was deeply discounted: Tether's net profit in 2024 was around $13 billion. Based on valuation metrics for publicly traded financial institutions, the company would be worth at least $130 billion. By this calculation, the paper value of Cantor's stake is over $6 billion.

Bitcoin entrepreneur Cory Klippsten, who met with Tether executives and Howard Lutnick in 2024, recounted that Tether Chairman Giancarlo Devasini described the deal as "ridiculously cheap."

Cory Klippsten previously had a business relationship with Tether that soured, leading to litigation. In court filings, Klippsten accused Tether executives of poaching employees, stealing code and trade secrets, and breaching agreements. Tether countersued Klippsten for improperly using a Tether investment as collateral for other trades. During the lawsuit, Klippsten sought to depose Howard Lutnick and subpoena documents related to Cantor Fitzgerald and Tether. Lutnick's lawyers argued in court that the Commerce Secretary was irrelevant to the dispute and that the discovery requests were intended solely to "harass and embarrass Lutnick."

In court documents from March, Klippsten claimed to have preserved complete records of his conversations with Giancarlo Devasini from that year. The complaint excerpts dialogue including the phrase "ridiculously cheap price." The filing argues that Cantor's convertible note essentially served as covert compensation for Howard Lutnick acting as Tether's representative in Washington and the media.

The Aborted Early Regulatory Bill

Lawmakers have long harbored suspicions about Tether. In late 2023, Wyoming Republican Senator Cynthia Lummis co-signed a letter urging the Justice Department to investigate whether Tether provided material financial support to Hamas and other terror groups during the October 2023 attack on Israel. In April 2024, Lummis, alongside New York Democratic Senator Kirsten Gillibrand, introduced a bill requiring all stablecoin issuers operating in the US to comply with American anti-money laundering rules and disclosure obligations.

Cynthia Lummis stated at the time: "If Tether wants to enter the US market, it must follow US regulations." She told CoinDesk after the bill was unveiled: "If Tether chooses to stay overseas and accept oversight from other regulators, that's a business decision. But if they want access to the US market, we want them to be compliant here."

In July of the same year, at the Bitcoin Conference in Nashville, Howard Lutnick once again publicly defended Tether, an event where Trump also delivered a keynote speech. Lutnick emotionally stated: "We would never do business with any company involved in jihadist terrorism. That's an abhorrent thought to me." He reminded the audience that over 650 Cantor Fitzgerald employees, including his brother, perished in the 2001 World Trade Center attacks.

Trump speaking at the Bitcoin Conference in Nashville, Tennessee, July 2024. Photo: Brett Carlsen/Bloomberg

After this speech, Trump, who had shifted from crypto skeptic to supporter, invited Lutnick onto his campaign plane and appointed him co-chair of the presidential transition committee. The group flew to Minnesota, where Lutnick spoke as a warm-up act before Ohio Senator JD Vance (a known crypto advocate) delivered a speech.

Cory Klippsten's notes indicate that Trump's rising poll numbers significantly boosted Tether executives' confidence. "They saw a new opportunity to fly to New York, get on CNBC – that's the platform Trump can provide."

In 2024, Howard Lutnick went to Washington. Lobbyists hired by Cantor Fitzgerald continued to communicate with House and Senate lawmakers, pushing for several pending stablecoin bills. Sources say Lutnick met with then-House Financial Services Committee Chairman Patrick McHenry to discuss how new laws might affect foreign firms like Tether. Patrick McHenry did not grant an interview. In September 2024, Lutnick met with Cynthia Lummis; a spokesperson for the senator said the meeting primarily focused on transition team preparations, with only brief mention of her concerns about Tether and financial crime.

The spokesperson emphasized: "No one tried to persuade Cynthia Lummis to abandon her own bill. Secretary Lutnick and his team never