Senate Report Links USDT to Iran’s Crypto Financing Networks
A new Senate investigation has raised concerns over the use of Tether’s USDT stablecoin in financial networks connected to Iran, including alleged terrorism financing and efforts to bypass U.S. sanctions.
The 28-page report, led by Sen. Richard Blumenthal, the top Democrat on the Senate Permanent Subcommittee on Investigations, examined blockchain activity involving 846 crypto wallets that had been sanctioned or otherwise blocked because of links to Iran.
According to the investigators, USDT featured prominently among wallets associated with alleged Iranian terrorism financing. The report found that 87% of 757 wallets examined in this category had primarily conducted transactions using USDT.
The investigators said the stablecoin’s popularity in Iran is partly explained by its deep use across local crypto exchanges and its relatively high liquidity compared with other digital assets. The report also accused Tether of failing to freeze certain wallets despite what investigators described as publicly available information connecting them to Iranian entities or terrorist organizations.
Blumenthal called the findings evidence that USDT has become an important part of what he described as Iran’s “shadow banking system.” He said the networks could help the Iranian government finance regional groups while supporting military programs and other activities subject to U.S. sanctions.
The senator has asked Attorney General Todd Blanche and Treasury Secretary Scott Bessent to examine whether the activities identified in the report could involve violations of sanctions or banking laws.
The investigation also pointed to Tether’s links to figures connected to the Trump administration. Howard Lutnick, now Commerce Secretary, previously headed Cantor Fitzgerald, which serves as a custodian for Tether. Leadership of Cantor Fitzgerald has since passed to his sons. Bo Hines, a former executive director of the White House Crypto Council, is now CEO of Tether U.S.
Blumenthal said those connections raise questions about whether Tether has received sufficient regulatory scrutiny over its anti-money laundering responsibilities.
Tether rejected the broader characterization of USDT as a tool for sanctioned entities. The company said Monday that it had helped freeze $550 million worth of USDT linked to Iran during the previous year.
Tether CEO Paolo Ardoino argued that blockchain transactions give authorities greater visibility into financial flows than traditional cash systems. He said the company can freeze assets when credible information is supplied by law enforcement.
The dispute highlights the continuing debate over how stablecoins are used in sanctions evasion and illicit finance, while also showing how blockchain records can give investigators a detailed view of transactions involving sanctioned entities.