Cantor Fitzgerald Holds Tether Convertible Bond, Howard Lutnick Says — WSJ
By Angus BerwickCantor Fitzgerald has a convertible bond with Tether, incoming Commerce Secretary Howard Lutnick said at his confirmation hearing, confirming previous reporting by The Wall Street Journal that Cantor had struck a deal to invest in the crypto firm.The Journal reported in November that under the agreement the Wall Street firm stood to receive about a 5% ownership interest in Tether, which Cantor valued at as much as $600 million. Lutnick hadn't previously commented on the deal.Asked by Washington Democrat Maria Cantwell if he or Cantor had ever invested in Tether, Lutnick told senators that Cantor had no equity in Tether, but owned a convertible bond. He didn't provide further details.Convertible bonds often pay a coupon and can be converted into shares in the issuing company at a predetermined price or price range. They allow companies to raise capital without immediate dilution to existing shareholders. Some financial watchdogs say convertible bonds can constitute a form of ownership interest as they may allow holders to exercise control over a company.Ahead of the hearing, Senator Elizabeth Warren demanded that Lutnick disclose more on his ties to Tether, whose dollar-pegged cryptocurrency has spread deep in the financial underworld.In a letter to Lutnick, Warren (D., Mass.) said his involvement with Tether raises questions about his judgement and potential conflicts of interest once in office. She cited the Journal's November article, which reported that Lutnick personally negotiated the Tether deal and had a close relationship with the firm's owner.Lutnick is set to resign from his position as Cantor CEO, which holds most of the assets that back Tether's stablecoin. He is Cantor's majority owner, and has said he will divest himself of interests in his companies.Warren asked Lutnick for details of Cantor's due diligence on Tether before accepting it as a client. The Justice and Treasury Departments have been investigating Tether for possibly violating financial-crime laws."If you are confirmed as Commerce Secretary, you will have extraordinary access to President Trump and other high-level officials responsible for regulating Tether, putting you in a position to influence policies that may directly or indirectly impact Tether," Warren wrote.A Cantor spokeswoman didn't respond to a request for comment on Warren's letter. Tether has said its relationship with Cantor is entirely professional.This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).