Top Trump official’s crypto ties raise red flags as the administration touts digital assets

By CNN Newsource

Published March 13, 2025 8:00 AM

By Allison Morrow, CNN

New York (CNN) — At a White House summit last week, Commerce Secretary Howard Lutnick spoke passionately about the Trump administration’s plans to embrace cryptocurrencies, a largely unregulated industry that has historically operated on the fringes of finance.

“Technology is at the foundation of the Trump presidency,” Lutnick said, addressing two dozen crypto CEOs. “We’re using the blockchain. We’re using bitcoin. We are going to use digital assets to pound forward, and Donald Trump is leading the way.”

The summit was remarkable in part because of the shift in tone from the White House, which under previous administrations, including Trump 1.0, largely kept crypto companies and their volatile digital tokens sidelined. Suddenly, with President Donald Trump’s re-election, the government is not only open to the industry — it’s actively cheering for it.

But Lutnick’s longtime industry ties have come under scrutiny as he pushes the Trump administration’s pro-crypto priorities, many of which have questionable benefits for anyone besides existing crypto holders.

Among those existing holders is Cantor Fitzgerald, the family-run Wall Street firm Lutnick headed for decades before handing the reins this year to his 27-year-old son, Brandon.

Cantor Fitzgerald is the primary banking partner for Tether, a controversial stablecoin issuer whose token of the same name is by far the most heavily traded digital asset.

And the firm is expanding its crypto holdings. On Tuesday, Cantor Fitzgerald announced it was setting up a new bitcoin financing business to provide leverage to institutional investors holding the asset.

The firm also recently acquired a stake — now valued at more than $1.58 billion — in MicroStrategy, the biggest corporate holder of bitcoin on the planet, according to a new report from Accountable.US, a progressive government watchdog group, that was shared exclusively with CNN. Cantor’s crypto holdings also include more than $87 million in iShares Bitcoin Trust ETF.

It’s not clear whether Lutnick personally holds crypto assets.

His 92-page financial disclosure listed holdings in more than 800 entities — all of which he pledged to sell within 90 days of being confirmed, in compliance with conflict-of-interest laws.

It’s not clear what the status of that process is.

The Commerce Department didn’t respond to multiple requests for comment. Cantor Fitzgerald also didn’t respond to a request for comment.

Lutnick’s crypto promotion while in office falls into an ethical gray area, according to experts who spoke with CNN.

“He ought to stay out of anything that Cantor Fitzgerald is doing and let other people handle that at the Commerce Department,” said Richard Painter, a University of Minnesota law professor who served as chief White House ethics lawyer under President George W. Bush. “Now, I’m going to tell you: There’s no law that requires him to do that.”

By putting Cantor Fitzgerald in his adult son’s control, Lutnick complied with conflict-of-interest laws that compel Cabinet members to divest certain holdings. Under the law, “divest” could include selling the assets, putting them in a trust or gifting them to a family member — excluding spouses or children under 18.

“The law only requires you to disclose and to divest,” said Hui Chen, an anti-corruption expert and former federal prosecutor who resigned from the Justice Department under Trump’s first administration. “But that doesn’t mean you can’t shape things for the long run that ultimately will benefit you.”

That issue is hardly unique to the Trump administration, Chen notes. “But this administration has certainly posed a lot of conflict questions.”

Despite Trump’s populist messaging on the campaign trail, his administration is one of the wealthiest in US history, with more than a dozen billionaires and mega-millionaires on staff.

“Having a lot of billionaires who are closely tied to what they’ll be regulating raises a lot of questions,” said Jordan Libowitz, the vice president for communications at the advocacy group Citizens for Responsibility and Ethics in Washington or CREW. “And they have been, for the most part, unclear on exactly what they’ll be doing in terms of divestment and recusal.”

Promoting Trump’s bitcoin reserve

Cantor Fitzgerald’s $1.5 billion stake in MicroStrategy, which last month renamed itself Strategy, is a bitcoin proxy holding — a popular way for mainstream investors to ride the crypto wave without the logistical and security headaches of actually holding digital assets.

Strategy’s founder, Michael Saylor, was one of about two dozen crypto leaders to attend the White House summit, and he is one of bitcoin’s most vocal evangelists. For the past five years, Saylor’s software company has amassed a roughly $40 billion stockpile of bitcoin — an estimated 2% of all bitcoin in circulation.

Strategy’s stock trades in lock step with bitcoin. In announcing the company’s new name and sharpened focus on the asset, Saylor declared: “We are a bitcoin treasury company.”

Shares shot up more than 10% earlier this month after President Trump announced plans on March 2 for a “crypto reserve” that would include bitcoin and other tokens.

But that initial burst in value quickly faded amid industry hand-wringing over the makeup of the planned reserve.

As prices slumped, Lutnick spoke to the media to clarify that bitcoin would have a unique status in the reserve once it was formally announced. It would be a bitcoin reserve, not a grab bag of crypto tokens — an important distinction for investors who view bitcoin as a kind of digital gold.

“A bitcoin strategic reserve is something the President’s interested in … and I think you’re going to see it executed (at the summit)” Lutnick told Pavlovic Today on March 5, two days before the crypto summit. “So bitcoin is one thing, and then the other currencies, the other crypto tokens, I think, will be treated differently — positively, but differently.”

Sure enough, the following day, Trump signed an executive order establishing a “Strategic Bitcoin Reserve,” along with a stockpile of other digital assets. Bitcoin, which is prone to volatile trading, went up slightly in response.

The digital asset, in step with financial markets, soared to record highs after Trump’s re-election but has in recent weeks struggled to shake off anxieties about the president’s ever-shifting trade policy — for which Lutnick is also a top spokesman.

What is the bitcoin reserve?

Under Trump’s executive order, the United States would essentially consolidate all the bitcoin it has seized through criminal and civil forfeitures and hold it as a reserve asset, similar to the way gold and petroleum are stockpiled, as a hedge against future financial instability.

This is a controversial idea among economists, lawmakers and even some pro-crypto analysts.

Critics question the wisdom of linking the full faith and credit of the US government to a purely speculative, highly volatile asset. They argue that the reserve is little more than a scheme to backstop the value of bitcoin, thereby juicing the portfolios of early investors.

“Who does having a strategic crypto reserve benefit? It’s not your everyday Americans, right? It benefits these guys,” Libowitz said, referring to current bitcoin holders.

Of course, with any innovation, early investors are poised to profit, Chen notes. But the question around bitcoin is more nuanced, given its lack of regulation and unproven benefits.

“I think the question is: How robust is the evaluation about the risk to the government when it puts its weight around this form of currency? … Who is doing that analysis? Are the people doing that analysis unbiased?” she said.

A White House official didn’t respond to specific questions about a risk assessment, telling CNN in an email that the bitcoin reserve is the best way to protect the digital assets already in the government’s possession.

Trump administration’s crypto holdings

The Accountable.US report found that at least four senior Trump officials disclosed total ownership of up to $7.7 million in cryptos including bitcoin, ether and solana, all of which spiked when Trump announced a crypto reserve plan on March 2. That surge would have boosted these officials’ investments by as much as $800,000, according to the report.

Two senior Trump officials, Treasury Secretary Scott Bessent and National Intelligence Director Tulsi Gabbard, have pledged to divest up to $1 million in crypto investments, but, according to the report, they have yet to file certifications showing that they have unloaded these currencies. (Both of their ethics pledges state they will divest by early to mid-April).

A Treasury spokesperson told CNN in an email Wednesday that “the secretary has already divested of this Bitcoin Trust” and that “he will file his certificate of compliance with the Office of Government Ethics by the required deadline.”

A spokesperson for Gabbard’s office told CNN the director is committed to her pledge to divest before her April 15 deadline.

President Trump himself is a recent convert to the crypto world.

The first family are direct beneficiaries of World Liberty Financial and at least two memecoins, $TRUMP and $MELANIA, that have raised concerns across the political spectrum about the potential for corruption. By its nature, crypto offers a particularly easy way to, anonymously or otherwise, funnel money into entities that could potentially enrich the president and his family.

Those concerns escalated late last month when the Securities and Exchange Commission, America’s top financial regulator, said it would no longer pursue its civil fraud case against crypto mogul Justin Sun.

Before the SEC put its case on hold, Sun had boasted on social media that he’d dropped $75 million on World Liberty tokens — an investment that could set the Trump family up to eventually collect tens of millions of dollars. (The SEC has declined to comment on the case.)

“This is, I guess, going to be the new approach — hands off crypto, not enforcing fraud … and I don’t think it’s going to end well,” Painter, the law professor, told CNN at the time. “The SEC is going to back off — because that’s what the Trump administration wants — on whatever enforcement they are able to do. I think it’s a very worrisome situation.”