U.S. Senator Richard Blumenthal, the top Democrat on the Senate Permanent Subcommittee on Investigations, is demanding answers about the ties between Cantor Fitzgerald and Tether, the worldwide leader in stablecoins. In a letter sent Thursday, the Connecticut lawmaker asked Cantor Fitzgerald CEO Brandon Lutnick to provide detailed information about the relationship between the financial firm and the stablecoin issuer.

Lutnick is the son of U.S. Secretary of Commerce Howard Lutnick, who handed the chief executive post at Cantor to his son when he left to join President Donald Trump's administration. Cantor holds and manages Tether's reserves in the United States, and the two companies share a number of other business interests. Those reserves are not incidental to the story: in a stablecoin, the reserve portfolio is what stands behind the token's peg to the dollar, which is why the custody arrangement sits at the heart of the senator's questions about how Tether's USDT is supervised.

The inquiry comes as Democrats steadily improve their chances of taking back a majority in the November election. If that momentum continues, Blumenthal and his colleagues may soon have considerably more authority behind probes of this kind.

Sanctions Safeguards and Illicit Finance in Focus

Blumenthal has been scrutinizing Tether's role in Iran's financial system, and in a September report he examined the stablecoin issuer's alleged ties to the country's shadow banking network. In his letter to Lutnick, he flagged the lucrative business connection between the issuer of USDT and the firm that handles its U.S. reserves.

"Just as Tether has made untold millions in interest and investments from the stablecoins used in these illicit activities, so has Cantor Fitzgerald profited from its relationship with Tether," Blumenthal wrote. He questioned Lutnick about his company's banking and sanctions safeguards, as well as about his father's history with Tether.

"While Tether claims to operate out of El Salvador, the vast majority of its assets reside in the United States under your custodianship," the Connecticut lawmaker wrote. "As Congress considers how to best regulate digital assets, your partnership with Tether will provide important insights into the inner workings of this industry."

Among the letter's many requests was one pointed demand: "Please describe all steps Cantor Fitzgerald has taken to investigate allegations that Tether's stablecoin has been used in illicit finance and money laundering, including within Iran's shadow banking network and for purposes of Russia sanctions evasion."

Neither Cantor Fitzgerald nor Tether immediately responded to requests for comment sent to their spokespeople.

Political Stakes for Crypto's Congressional Critics

Blumenthal and other aggressive congressional critics of the crypto industry, such as Senator Elizabeth Warren, have operated with limited authority as members of the minority party. The subcommittee Blumenthal serves as ranking member sits under the Senate Homeland Security and Governmental Affairs Committee, and its leadership changes hands with the majority — one reason securing a Democratic majority for next year would change that. If Democrats win several more seats in the chamber, they could find themselves atop committees with subpoena power to legally compel information and testimony.

As it stands, prediction markets suggest Democrats have a better-than-even shot at returning to the majority. Kalshi puts the odds at 61%, while Polymarket has them at 64% — numbers that were closer to 50-50 several weeks ago. The picture in the U.S. House of Representatives is even more favorable for Democrats, with both platforms showing the likelihood of a majority shift at more than 90%.

How November resolves, and whether Cantor or Tether answer the letter — neither did so immediately — will shape how much authority the inquiry can bring to bear.

This article is based on reporting originally published on CoinDesk.