TLDR
- A Senate report said Tether’s USDT played a central role in Iran-linked shadow banking activity.
- Investigators reviewed 846 sanctioned or blocked wallets tied to Iran.
- The report said 87% of 757 wallets linked to Iranian terrorism financing mainly used USDT.
- Sen. Richard Blumenthal asked the DOJ and Treasury to review possible sanctions and banking law violations.
- Tether rejected the claims and said it helped freeze $550 million in USDT tied to Iran over the past year.
Tether faces new scrutiny after a new Senate investigation said USDT played a central role in Iran’s shadow banking system. Sen. Richard Blumenthal released the 28-page Democratic staff report on Monday through the Senate Permanent Subcommittee on Investigations.
The report reviewed blockchain data from 846 sanctioned or blocked wallets tied to Iran. Investigators said 87% of 757 wallets linked to Iranian terrorism financing mainly used USDT. They cited easy trading, exchange access, and broad use as reasons for that pattern.
Wallet Data Raises Compliance Questions
Investigators said some Iranian networks used USDT to move funds outside the formal banking system. The report said Iranian-linked wallets interacted with exchanges, brokers, and payment channels while US sanctions remained in force. It also said Tether missed several chances to block suspect wallets.
The wider oversight debate comes as US agencies continue work on payment stablecoin rules. The report said Tether did not always freeze wallets with public links to Iranian entities or terrorist groups. Investigators said open blockchain records gave the company enough warning in some cases.
Tether Rejects Claims Over USDT Controls
Blumenthal asked Attorney General Todd Blanche and Treasury Secretary Scott Bessent to review possible sanctions and banking law violations. Recent crypto guidance after the CLARITY Act vote has kept digital asset oversight in focus across Washington. The letters asked both agencies to examine whether enforcement gaps allowed Iranian-linked flows to continue.
The report also cited Tether’s US links, including Cantor Fitzgerald’s custody role under former CEO Howard Lutnick. Lutnick now serves as Commerce Secretary, while his sons lead the firm. Bo Hines, the former White House Crypto Council executive director, now leads Tether U.S.
Company Points to Frozen Funds
Tether said it helped freeze $550 million in USDT tied to Iran during the past year. CEO Paolo Ardoino said public blockchains give authorities visibility that cash does not provide. He said the company can act when law enforcement provides credible information. The response came as regulators review stablecoin reward rules under the GENIUS Act.
The company said USDT does not serve sanctioned actors, terrorist groups, or criminal networks. The Senate report may keep Tether, USDT controls, and crypto sanctions enforcement under review during the coming months as lawmakers request more federal review.
