A latest investigation report released by Democratic lawmakers on a U.S. Senate standing investigative subcommittee (PSI) says that Iran’s financial network makes extensive use of the stablecoin USDT issued via Tether, and that USDT has become an important tool for Iran to evade U.S. sanctions and related financing activities. The investigation team analyzed 846 cryptocurrency wallets that were sanctioned, blocked, or seized due to their links to Iran. Of those, 757 involved cryptocurrency wallets connected to Iran’s terrorist-financing activities, and 87% of them primarily used USDT to carry out transactions.
Senate panel calls for investigation of Tether, focusing on sanctions compliance and anti–money laundering regulations
The 28-page report led by Sen. Richard Blumenthal states that USDT is widely used in Iranian crypto exchanges, and that, compared with other stablecoins, its higher liquidity makes it the preferred crypto asset for financial networks related to Iran. Investigators also said that for some wallets associated with Iranian entities or terrorist organizations—even if relevant information had already been made public—Tether had not taken timely freezing measures.
Blumenthal said in the report that USDT has been used for funding activities related to the Iranian government and its regional proxies, and may involve evading U.S. sanctions, human rights abuses, and drone and missile programs. Blumenthal also sent a letter to U.S. Attorney General Todd Blanche and Treasury Secretary Scott Bessent, asking them to investigate whether Tether is involved in violating sanctions and banking-related laws.
The report also lists Tether’s relationship with the Trump administration as a matter of concern. Key U.S. business ties for Tether include Cantor Fitzgerald, which has served as Tether’s custodian and was previously led by current Commerce Secretary Howard Lutnick; in addition, Bo Hines, the former executive director of the White House cryptocurrency committee, currently serves as CEO of Tether U.S. Blumenthal therefore questioned whether Tether’s relationship with the U.S. government could potentially affect enforcement and oversight of relevant anti–money laundering obligations. The questions above are those raised by Blumenthal and the investigation team, not confirmed unlawful findings.
Tether Responds: This Year It Has Helped Freeze $550 Million in Iran-Related USDT
Tether, meanwhile, rebutted some of the allegations in the Senate report and emphasized that the company has always cooperated with U.S. and other countries’ law enforcement agencies. On September 28, Tether said that since 2026 it has helped freeze about $550 million worth of USDT related to the Iranian Central Bank and Iran’s sanctions networks through cooperation with the U.S. government and law enforcement agencies.
Among other things, in April this year Tether cooperated with the U.S. Office of Foreign Assets Control (OFAC) and U.S. law enforcement agencies to freeze more than $344 million in USDT in two addresses; in July, after the U.S. Treasury expanded sanctions against addresses related to the Iranian Central Bank, it froze more than $130 million in USDT in four wallets again.
Tether CEO Paolo Ardoino said that a public blockchain gives law enforcement agencies the ability to track the flow of funds, and that Tether can take freezing measures after receiving credible law-enforcement information. Tether also said it has already worked with more than 340 law enforcement agencies worldwide and has participated in more than 2,900 investigations.
This Senate investigation highlights the dual role of USDT in both sanctions evasion and illegal financial activity: on the one hand, Iran-related financial networks do indeed use USDT extensively; on the other hand, Tether is also able to limit the movement of assets in specific wallets through the freezing mechanism available to the issuer in coordination with law enforcement agencies. The main dispute between the two parties at present is whether Tether has sufficiently and promptly identified and frozen wallets showing signs of involvement in illegal financial activity.
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