Democratic investigators on the U.S. Senate Permanent Subcommittee on Investigations say that the USDT, a stablecoin issued by Tether, has become a relevant part of the parallel financial network used by actors linked to Iran to move funds outside the traditional banking system. The conclusion appears in a report released this Monday (28) by Senator Richard Blumenthal and the subcommittee's Democratic staff.
The analysis examined 846 cryptocurrency wallets that had been sanctioned or targeted by seizure orders by authorities in the United States or Israel for association with the Iranian government and groups linked to Tehran. According to the investigators, 84% of these wallets traded exclusively or almost exclusively in USDT.
The report maintains that the stablecoin has been used in operations to move funds into and out of Iran and, in some cases, in structures related to the Iranian Central Bank. Because it is pegged to the dollar and has high liquidity, USDT would function, according to the investigation, as an alternative for networks with limited access to the traditional financial system due to sanctions.
Among the cases cited is a network involving two sanctioned Iranian oil traders. More than US$ 603 million in USDT reportedly passed through the structure between 2021 and 2025, according to the report, which says it identified transactional connections with Iranian financial institutions, Hezbollah and Houthis.
The conclusions are those of the Senate investigators and do not, in themselves, represent a judicial determination on the origin or purpose of each transfer.
Report questions speed of freezes
The team also questions Tether's conduct regarding addresses identified by authorities. Investigators say that, especially before 2024, the company did not consistently block wallets designated by counterterrorism bodies. In one of the cases analyzed, US$ 34.6 million continued circulating after the wallets had been sanctioned.
The report acknowledges a limitation of the analysis: blockchain addresses are pseudonymous and do not directly reveal their owners. The team based its attributions mainly on data from OFAC, the U.S. Department of the Treasury, and Israeli authorities.
Tether responded by highlighting its cooperation with authorities and says that actions involving USDT made it possible to freeze about US$ 550 million linked to Iranian networks in 2026. The company rejects the idea that the stablecoin serves as a refuge for sanctioned entities.
Blumenthal forwarded the conclusions to the Treasury and Justice departments and asked the agencies to examine Tether's practices related to sanctions and anti-money laundering. The report does not conclude that the company violated U.S. law, but asks authorities to investigate possible violations.
