The Trump Insiders Who Shaped Crypto Law

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2:40dollar. That backing is designed to ensure stablecoins maintain a steady, stable value, unlike other cryptocurrencies. Another feature? Users can send their money across borders without having to deal with the fees, regulation, and scrutiny of banks. That's made stablecoins popular with all kinds of people, including criminals, terrorists, and sanctions evaders, a problem the Genius Act sought to address. But the idea of regulation set off alarm bells within the stablecoin industry, including at Tether. Tether's the most dominant force in stablecoins and one of the biggest overall crypto companies in the world.

3:23We've tracked and we think that they control about 60 percent of the stablecoin market. That's Bloomberg senior investigative reporter Anthony Cormier. Tether's main product is a stablecoin called USDT that's pegged to the U.S. dollar. There's currently more than$180 billion worth in circulation. And for every USDT out there, Tether is supposed to hold one U.S. dollar in reserve. It can invest those dollars and hang on to the profits. And that simple idea has turned Tether into a giant. They grow year by year. They're exponentially larger than their nearest competitor. But when lawmakers started calling for more oversight of stablecoins, the company was concerned that U.S.

4:08regulation could threaten that growth. or worse. Tether's CEO said he thought that the U.S. could like flick a switch and shut them down. Bloomberg senior investigative reporter David Kochenewski. There was pressure from U.S. lawmakers and U.S. law enforcement to see whether they were doing enough due diligence and enough anti-money laundering. It was kind of an existential moment for them. But in the end, the version of the Genius Act that Congress passed last summer contained provisions that benefited Tether. I also want to recognize some of the countless industry leaders here today, including Brian Armstrong of Coinbase.

4:44In fact, Tether's CEO, Paolo Arduino, even attended the bill's signing. Paolo Arduino of Tether. So how did Tether go from fearing stablecoin regulation to supporting the Genius Act? A new Bloomberg News investigation reveals the story behind that shift. We found that two of the president's key advisors, Commerce Secretary Howard Lutnick and crypto advisor Bo Hines, were influential in shaping the way that bill turned out both before and after Trump took office. And both of those men ended up having close ties not only to Trump, but to Tether.

5:33I'm Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, the inside story behind the Genius Act and how Trump administration officials who wound up with close financial ties to Tether helped shape crypto regulation to the company's benefit.

5:54Way back in 2021, long before there was a Genius Act, Tether was a hugely profitable company with an image problem. That year, federal regulators and New York State brought claims against Tether and a related crypto exchange, alleging that Tether had misled investors about their reserves. Tether and the exchange ended up paying more than$60 million to settle those claims. Tether never acknowledged any wrongdoing in the settlements. But questions about the company's assets persisted. So the company enlisted Cantor Fitzgerald, a New York financial firm, to manage the company's reserves. At the time, Howard Lutnick was Cantor Fitzgerald's CEO.

6:38Howard Lutnick is a longtime financier. He took over and was in charge of the firm during 9-11 when his office building was in the World Trade Center and they lost scores of employees. They are, you know, a very big but not tremendously sized financial institution. But what they offered to Tether was the ability to buy treasury bonds, which is one of the core ways you can back up or reserve your stablecoins. Those are very liquid. You can trade them very easily. It's essentially like having cash. In January 2024, Lutnick vouched for Tether's reserves on Bloomberg TV. There's always been a lot of talk.

7:20Do they have it or not? So I'm with you guys saying we've seen it and they have it. What do we know now about the deal that Cantor Fitzgerald and Tether struck shortly after Ludnick made these comments? Right. So a few months later, Cantor Fitzgerald go from a holder of their reserves, manager of their money essentially, to a potential owner in Tether. strike a deal whereby Cantor Fitzgerald would pay$600 million for a convertible bond, which would offer them the right to take 5 % of Tether. And our sort of back-of-the-envelope math, a conservative estimate of that, is that that deal was worth, Cantor Fitzgerald paid$600 million for something that is at that time worth$6 billion.

8:06And according to associates who spoke to Tether's folks, that was, quote, bloody cheap. So this deal brings Cantor Fitzgerald and Tether's financial interests even closer together, right? Meanwhile, efforts are mounting on Capitol Hill to push back on Tether. What were lawmakers' concerns during this period between 2023 and 2024, again, before Trump takes office the second time? And who was voicing those concerns? A great number of federal law enforcement officials and lawmakers on both sides of the aisle were expressing persistent concerns with Tether's ability to stop terror financing, money laundering, narco trafficking, things of this nature.

8:47What happens in 2024 is that two lawmakers, Senators Cynthia Lennis and Kirsten Gillibrand, propose a bill along with their counterparts in the House that would have begun to set ground rules for the way stable coins can be traded and companies have to post their reserves. So the heat on Tether was rising at this point. They were facing the risk for them of Congress passing bills that would further regulate them. This is also around the time of Trump's campaign for a second term and his push for the U.S. to be the crypto capital of the world. I want to ask about Howard Lutnick at this point. What is Lutnick's relationship to Trump and his campaign?

9:33You know, he had been a supporter, but it really kind of crystallized at the Bitcoin conference in Nashville that year. Howard gave the keynote speech, spent most of the time talking about Tether, how they have the money they say they have. That, you know, he said that people had complained that Tether was working with Jihad. And then he invoked the memory of the 600 employees he lost at Cantor Fitzgerald and his own brother and best friend who died. And he said, you know, I lost these people at 9-11. I would never do business with anyone who had anything to do with jihad, and the very thought of it disgusts me.

10:07Going to bat for Tether once again. Yes. That conference was kind of a big moment for Trump, who had been a crypto skeptic during his first term. He said it was a scam, but they raised, I think,$25 million at that Bitcoin conference for his campaign. Howard, after the speech, talks to Trump. He's invited to get on the campaign plane with him. On the campaign plane, Trump asked him to be the co-head of his transition team. So he is now part of the inner circle. And from that point, he had a very close relationship with the campaign, the transition, and ultimately shaping the administration. In September of 2024, Lutnick met with one of the senators pushing crypto regulation, Senator Lummis.

10:52A spokesperson for Senator Lummis said Lutnick never urged her to back off support for her bill. or pressured her in any manner to make changes. Court filings related to a case brought against Tether by a Bitcoin entrepreneur who had a failed partnership with the company raise other questions about Lutnick's actions during this period. The filing contains what the entrepreneur describes as his contemporaneous notes of his conversations with Tether's chairman, including one that says the chairman told him, quote, According to Howard, he managed to kill every bill about stablecoins, crypto, etc.

11:28Unquote. By the end of the year, the stablecoin legislation had gone nowhere. A spokesperson for the Commerce Department did not answer detailed questions about Bloomberg's reporting, but said Lutnick complied with the terms of the federal ethics agreement required of cabinet appointees and divested from his holdings, including Tether. There's a moment I want to unpack a few months later. So Trump wins the 2024 U.S. presidential election. Lutnick is made Commerce Secretary. So Tether has this powerful ally in the cabinet. What's the next big business deal between Tether and the Trump universe?

12:08Before he takes office, after Trump is elected, but before he's inaugurated, Cantor Fitzgerald, including Howard Ludnick, they negotiate a deal in which Tether is going to invest$775 million in a money-losing video production company called Rumble. And what we know is that Rumble partners with Truth Social, and it also counts as investors, some pretty significant figures in the Trump administration, including in the past, J.D. Vance. So Tether partners, Tether invests in a money-losing venture that is tight with the Trump administration. Why does that matter? Well, part of it is, A, it made the stock go up right away.

12:50And second of all is that out of the$775 million, they allowed them to use$525 million for share buybacks, even though the company was losing money. Almost 70 % of Tether's investment went to share buybacks from certain members of key management. So immediately, you know, they had the access to kind of cash out at a very favorable price. How does Tether explain why they would invest in this money-losing company? They said that they had a freedom agenda that Meta and other platforms early on were blocking people for hate speech or for things that were untrue. And so they said Rumble's going to allow people to speak their minds, and Tether said we agree with that.

13:26And they also said they might want to use them as a platform for other crypto deals and for using Tether as a currency. Tether as well has said that it acted only lawfully and properly. And during 2025, they didn't say this to us, but the New York Times, they said that they were careful to not have any contact with Howard once he became Commerce Secretary, because that would have been improper.

13:51After the break, enter the Genius Act.

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16:46When the Genius Act was finally passed in 2025, Bloomberg's Anthony Cormier and David Kochenewski say it was a lot more crypto-friendly than Congress's first attempts at regulating the stablecoin industry. Past versions of this could have forced companies like Tether who are based offshore, to come into the United States and submit to our sort of regulatory regime. But the new bill, the Genius Act, does not have that sort of restriction. It offers what critics would call a reciprocity loophole, whereby the Treasury Secretary can determine that a foreign country has a comparable regulatory apparatus that's the United States.

17:27Like El Salvador, where Tether is based. Like El Salvador. So rather than submitting to the authority of the U.S., in the case of Tether, they could submit to the authority of El Salvador, which is a very crypto-friendly country. There's two other areas where it helped Tether. One was the DeFi protocols. You know, one of the ways that crypto ends up being used for nefarious purposes is it's sold on a secondary market. And so Tether will sell to like 40 or 50 different exchanges. You know, they kind of do all kind of vetting and due diligence on them. But then it can be sold on the open market and it can be sold on some exchanges that will allow people to have totally anonymous wallets.

18:05That's called DeFi. And there were some attempts early on to make very tight restrictions that would force the issuer to kind of see downstream and make sure that the DeFi sales weren't going to be to illicit places. Tether and a few others also pushed against that because that would have put a lot of responsibility on them. Another big win for Tether was the timeline. how long crypto companies had to come into compliance with the Genius Act. This is a big deal, our reporting shows, to Tether, that they wanted that grace period, so to speak, to be as long as possible. There are a series of meetings very late in the game, and that's where one of the White House officials that we're reporting on really sort of stepped in and took actions that were beneficial to Tether.

18:51That official was Bo Hines, head of the White House Presidential Council of Advisors for Digital Assets. He was not really a crypto person. Bo's first introduction to the crypto world was he played in the Bitcoin Bowl as a college football player. When he was named as the president's advisor, people were all surprised because they thought it would be someone who was deeply involved in it. And people who negotiated with him said there were things about Bitcoin that they had to explain to him. So what Bo Hines lacked in experience or crypto expertise he made up for in a couple of things that Trump loves.

19:27He is very tall, very muscular. He has a very camera-ready jawline. And he is a dyed-in-the-wool MAGA guy. He is on the record saying that Trump won the 2020 election. Also, during the fall of 2024, a business Heinz operated with his father donated a million dollars in billboard advertising to a political action committee supporting Trump's campaign. He's elevated pretty quickly. It's a very, very important position. And the thing that he takes on, his remit, is getting the Genius Act across the line. And like Beau said publicly, in order to get it across the line, he acted as literally, quote, the bully.

20:10And what does being the bully entail? What did he do? I think at critical moments in these negotiations, when they reached impasses, our reporting shows that he often invoked the name of the White House, the president himself, to get these things over the line. So Bo Hines, as the head of the White House Crypto Council, pushed hard to pass this bill that in its final form contained provisions that Tether wanted, as you said. Then after the Genius Act becomes law, how long does Bo Hines stay in the Trump administration? He stayed a few weeks after the Genius Act was signed. And then within a few weeks after that, he was hired by Tether for an executive job.

20:52We've asked but have not been told what the compensation is. So Bohinds went from working on crypto regulation legislation to working for a crypto company. Yes, the revolving door revolved very quickly in that case. I think you can go even beyond that. Our reporting shows that he advocated internally for measures that ultimately benefited Tether. And then within a month after leaving the White House, he took a job with Tether. There's no prohibition on anyone from taking that kind of job. But again, Tether says that all of this was proper. None of it was inappropriate. And Hines has not responded to detailed requests for comment.

21:32As for Lutnick, a spokesperson for the Commerce Department said Lutnick, quote, was not involved in any matters relating to the Genius Act's stablecoin provisions. How does Tether explain their close ties with Lutnick, Hines, the Trump administration, and their view of how the Genius Act ended up containing these provisions that were favorable towards them. Well, look, I mean, they're a dominant player in the cryptocurrency business. And as they've said to us and to their credit, any market participant has a right to lobby for its own interests. Tether says that all of this was done above board.

22:11There's nothing improper. that they have regular contacts with law enforcement agencies, lawmakers, regulators. To their credit, they have been cited very favorably lately by law enforcement officials for cooperating and shutting down anti-money laundering or narco-trafficking, terror financing cases. They've drawn a lot of praise in that space that I think they deserve some credit for. That being said, they also continue to be widely used by sanctions evaders. I mean, in 2025, the year that the Genius Act was being negotiated and enacted, there was a transaction where half a billion dollars in tether were purchased by the Central Bank of Iran at a time when Iran was sanctioned.

23:01Three months after the Genius Act was signed, Lutnick sold his multi-billion dollar ownership interest in Cantor Fitzgerald to trusts benefiting his children, to comply with federal ethics rules meant to curb conflicts of interest. And Bloomberg found that the day after the sale was closed, a document was filed in New York that showed Tether had loaned one of those trusts an undisclosed sum of money. Lutnick has declined to reveal what his children paid for his holdings, or whether the loan that their trust received from Tether was used to finance the transaction. And that loan is now raising a lot of questions in Congress.

23:40We don't know, we can't say for certain that it was used to close the deal, but lawmakers very recently issued a letter based on our reporting saying, what's the deal here? They said that we want to question you to see whether this was an attempt to influence or bribe you, is what the questions were. And by this point, because the Genius Act had already been enacted and Tether has now got far more ability to make money and to expand its market share, the stake in Tether that was worth$6 billion when Cantor-Bristradial had bought it in 2024 might have been worth as much as$25 billion.

24:23This is The Big Take from Bloomberg News. I'm Sarah Holder. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. If you like this episode, make sure to subscribe and review The Big Take wherever you listen to podcasts. It helps people find the show. Thanks for listening. We'll be back tomorrow.

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