Tether’s USDT stablecoin has become a key payment mechanism in an Iranian cryptocurrency network used to move funds around international sanctions, according to a report released by Democrats on the U.S. Senate Permanent Subcommittee on Investigations.

The report analyzed blockchain activity involving 846 cryptocurrency wallets sanctioned or targeted for seizure because of their links to Iran and Iranian proxies. It found that 84% of the wallets had transacted exclusively or almost exclusively in USDT.

 

CRYPTO CRIME | Iran Shadow Banking Network Relies Heavily on USDT, U.S Senate Report Finds

 

The investigators said the network has been used to

  • move funds into and out of Iran,

  • support efforts to prop up the Iranian rial, and

  • facilitate transactions connected to military equipment and regional proxy organizations.

The report also criticized Tether for not consistently freezing wallets identified by U.S. and Israeli counter-terrorism authorities before 2024 and said the company has continued to allow some illicit wallets to operate.

Senator Richard Blumenthal, the sub-committee’s ranking Democrat, referred the findings to the U.S. Treasury and Justice departments and called for investigations into Tether’s sanctions and anti-money-laundering controls.

 

REALITY CHECK | Crypto is a ‘Tool of Choice for Sanctions Evasion’ for Iran, Says U.S Treasury

 

The report said Tether has since frozen some wallets associated with Iranian entities while USDT activity linked to Iran has declined. Transactions in USDT across wallets attributed to Iran fell from 72% of their crypto activity in 2024 to 67% in 2025, according to data cited in the report.

Despite the decline, investigators said USDT remained prevalent among wallets sanctioned more recently, including wallets linked to Iran’s central bank and networks alleged to have facilitated Iranian oil sales.

The findings put the use of dollar-backed stablecoins in sanctioned markets under renewed scrutiny highlighting how crypto networks can provide access to dollar-denominated liquidity outside the traditional banking system.

 

 

2025 RECAP | Illicit Stablecoin Activity Surged to 5-Year High in 2025 with Over 80% Used for Sanctions Evasion

 

 

 

 

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