Senate report says Iran used Tether’s stablecoin to evade sanctions

A US Senate report says Tether’s stablecoin has become a significant financial lifeline for Iran and a tool for funding proxy organisations, including Hezbollah⁸. Senator Richard Blumenthal said the Permanent Subcommittee on Investigations report exposes how Tether and its flagship token have become central to Iran’s shadow banking system, allowing the Iranian government to operate around the banking system¹⁰. The report says Iran uses Tether as an international payment system to get around sanctions on its banks, and as a means to fund terrorist proxies¹².

The probe put a figure on the concentration. It found that 87% of Iranian terror-finance wallets primarily used USDT⁷. Portions of that network maintained direct links to the Central Bank of Iran and to accounts tied to the Islamic Revolutionary Guard Corps, and the report accuses Iran of using Tether to procure Shahed drone parts¹⁴.

Why it matters to investors

Democratic investigators referred the matter to the Treasury and the Justice Department over potential anti-money-laundering and sanctions compliance gaps, after finding that more than $34.6 million had moved through the network⁵. Blumenthal asked the two departments to examine whether Tether may have violated sanctions and banking laws⁷.

The report also raises a conflict question. Blumenthal flagged Tether’s ties to the administration, noting that Cantor Fitzgerald, once run by Commerce Secretary Howard Lutnick, owns about 5% of Tether^1,3 and acts as the issuer’s custodian^2,4. Crypto market coverage asked whether the scrutiny could affect ordinary holders of the token².

What to watch

Tether says it has cooperated. The company said its actions helped freeze about $550 million in Iran-linked digital assets, describing the freezes as part of its cooperation with the Treasury^6,13. It also said more than $130 million in USDT across four wallets was frozen in July, as the Treasury expanded the Central Bank of Iran’s listed entities⁹.

The gap between the two accounts is the open question. Reporting on the exchange noted that about $35 million slipped past the freezes^5,9. Yahoo Finance framed the issue as whether Tether’s USDT has become Iran’s shadow bank¹¹. Engadget reported the same claim from the Senate side¹². What happens next depends on whether the Treasury and the Justice Department act on the referral^5,7.

Tether described itself in the same statements as the issuer of the world’s largest stablecoin, and said the freezes reaffirm its cooperation with US authorities^6,13. CryptoSlate and CryptoRank both carried the arithmetic of the dispute side by side^5,9.