Cantor Fitzgerald, the Tether-linked broker, agreed to pay the Securities and Exchange Commission (SEC) a $6.75 million penalty yesterday after it was charged with causing two special purpose acquisition companies (SPACs) that it controlled to make misleading statements to investors ahead of their initial public offerings (IPOs) that raised $750 million.

The SEC’s Division of Enforcement Acting Director, Sanjay Wadhwa, said that Cantor Fitzgerald “repeatedly” claimed it hadn’t approached merger targets in public filings despite having “substantive discussions with several private companies regarding a potential merger, including with the companies with which its SPACs eventually merged.”

The SEC press release notes that Cantor Fitzgerald neither admitted to nor denied the charges levied against it in the order and paid the civil penalty.

Read more: Why are Tether and Cantor Fitzgerald lending near identical amounts?

SPACs, otherwise known as blank-check companies, are shell corporations with no business operations that are used to merge with or acquire a private company. In this case, Cantor Fitzgerald used its two SPACs, CF Finance Acquisition Corp. II and CF Acquisition Corp. V, to raise millions before merging with View, Inc. and Satellogic Inc., respectively.

A Cantor Fitzgerald spokesperson told CNBC that, “No investor was ever harmed by the alleged issues described in the order,” and that it’s “pleased to have concluded this matter by mutual agreement with the SEC.”

Cantor Fitzgerald CEO and Chairman, Howard Lutnick, is now leading Donald Trump’s Commerce Department and was hired as co-chair for Trump’s transitional team.

A Wall Street Journal report revealed Cantor Fitzgerald acquired a 5% stake in Tether that was worth as much as $600 million. It also notes that the broker holds the majority of Tether’s $134 billion in assets in exchange for tens of millions of dollars in fees.

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At Bitcoin 2024 in Nashville, Cantor Fitzgerald, Tether’s custodian for United States treasuries, announced a new lending business which will allow people to get leverage on their bitcoin.

Cantor Fitzgerald chief exec Howard Lutnick reportedly stated that it is “going to launch with $2 billion in lending.” 

The announcement noted that Cantor Fitzgerald “partner with select bitcoin custodians” to launch this new business line. 

Lutnick also noted that the firm owns a “shitload” of bitcoin.

Protos has reached out to Cantor Fitzgerald to determine who it has partnered with for this new business line, but at press, it has not responded.

Tether’s loans

In December 2022, Tether announced its intention to “reduce secured loans in Tether’s reserves to zero.”

Despite this, Tether still has secured loans, but it now considers them ‘excess reserves’ and states they “won’t have any impact on the token reserves.”

Interestingly, Tether’s most recent attestation shows that its secured lending business has grown to a value of $6.57 billion, an increase of nearly $1.9 billion since the last attestation. 

Read more: Tether says it makes money but can’t ditch loans

Protos has reached out to Tether to determine if it has taken on new clients to this business in recent months, but at press, it has not responded.

It’s not currently clear exactly why Cantor Fitzgerald and Tether’s lending businesses have grown by nearly the same amount in recent months.

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Cantor Fitzgerald chief Howard Lutnick recently appeared on CNBC’s Money Movers podcast and, in the process, discussed his financial firm’s relationship with leading stablecoin Tether. Lutnick was quick to share his opinions throughout the interview, including that stablecoins are great, Bitcoin is good for oligarchs, and Ethereum is incredibly centralized.

“I’m a big fan of this stablecoin called Tether… I hold their treasuries,” Lutnick said on the podcast. “So I keep their treasuries, and they have a lot of treasuries.”

Lutnick then highlighted that “they’re over $90 billion now.” This comment seems to refer not to the treasuries that Tether holds — since they only have $56.6 billion — but to the market cap of the token itself, which has recently broached $90 billion.

The 62-year-old chose to additionally highlight differences between Bitcoin and Tether, specifically highlighting how Tether will respond when the Department of Justice calls to request that tokens be frozen. 

Cantor Fitzgerald chief a Tether fan, Bitcoin maxi

“I am a fan of crypto, but let me be very specific, bitcoin, just bitcoin. These other coins, they are just not a thing,” Lutnick said during the podcast.

The Cantor Fitzgerald CEO pointed towards the upcoming halving as a catalyst for Bitcoin, suggesting that historically, the halvings have been periods where Bitcoin has benefited. He also suggested that it will serve as a safety asset for those with concerns about the current fiscal policies of their governments.

Read more: Russian founder of sanctioned exchange Garantex starts Tether desk

He also chose to highlight how he perceives bitcoin as a more censorship-resistant and seizure-resistant asset for oligarchs, pointing out that sanctioned Russian individuals had their yachts seized but would not have bitcoin seized.

Lutnick also suggested that Ethereum lacked these same characteristics, inaccurately saying that if someone wanted to freeze assets on Ethereum, they could achieve this goal by reaching out to Joseph Lubin of Consensys.

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