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Sep 29, 2026
Senate report puts USDT at the center of Iran sanctions-evasion claims
US senators portray dollar-linked crypto as a crucial channel in Iran’s parallel financial system, while Tether argues that the public blockchain and its own freezes make USDT a tool for enforcement rather than a refuge from sanctions.
A US Senate investigation has intensified scrutiny of USDT, arguing that Iran-linked networks have used the dollar-pegged stablecoin to move money outside conventional banking channels and mitigate the impact of sanctions.
The inquiry by the Senate Permanent Subcommittee on Investigations reviewed 846 cryptocurrency wallets that US and Israeli authorities had sanctioned or targeted for seizure over alleged links to Iran and Tehran-backed organizations. It found that 84% of the wallets used USDT exclusively or almost exclusively. Investigators say the stablecoin’s relative price stability, unlike bitcoin’s volatility, made it useful for transferring value internationally while retaining a dollar reference.1
Senator Richard Blumenthal, the ranking Democrat on the subcommittee, described USDT as part of Iran’s “parallel banking system.” The report says the infrastructure was connected not only to the Iranian central bank and efforts to support the country’s currency, but also to Tehran-aligned groups including Hezbollah, as well as transactions involving drones and other military equipment.1
The investigators’ criticism focuses on whether Tether acted quickly enough against identified wallets. They say that before 2024, the company did not consistently freeze addresses flagged by counterterrorism authorities, and urged the Justice and Treasury departments to examine its anti-money-laundering and sanctions compliance.2
Tether rejects the suggestion that USDT provides a safe channel for sanctioned actors. Chief executive Paolo Ardoino said, “Tether has consistently demonstrated that USDT is not a safe haven for sanctioned actors, terrorist organizations, or criminal networks.” The company says it helped freeze roughly $550 million tied by US authorities to Iran’s central bank and sanctions-evasion networks in 2026, arguing that public-blockchain transactions can be traced and assets blocked when authorities provide reliable information.1
The dispute comes alongside wider US action against Iranian digital-asset platforms, including sanctions targeting Nobitex and BitBank over alleged links to sanctions evasion and the Islamic Revolutionary Guard Corps.2