Senate Report Says USDT Is Central to Iran’s Shadow Banking Network

A new Senate investigation says Tether’s USDT stablecoin has become a key tool in Iran’s financial networks, funding regional proxies and evading sanctions, though Tether says it has frozen $550 million in Iran-linked funds over the past year.

Senate Report on Tether and Iran Sanctions

Sen. Richard Blumenthal, top Democrat on the Senate Permanent Subcommittee on Investigations, released a 28-page report Monday examining blockchain data from 846 sanctioned or blocked crypto wallets tied to Iran. He said the findings show Tether has become central to Iran’s shadow banking system, letting the government fund proxies, commit human rights abuses and pursue drone and missile programs despite sanctions.

87% of Sanctioned Wallets Used USDT

The report found that 87% of 757 wallets linked to Iranian terrorism financing mainly transacted in USDT, which investigators attributed to the stablecoin’s liquidity and wide use among Iranian exchanges. Investigators said Tether repeatedly failed to freeze or block wallets showing strong signs of illicit activity, even when public information tied them to Iranian entities or terrorist groups outside formal sanctions notices.

Blumenthal Flags Tether’s Trump Administration Ties

The report also points to Tether’s connections to the Trump administration, including Commerce Secretary Howard Lutnick, whose former firm Cantor Fitzgerald acts as Tether’s custodian and is now run by his sons, and Bo Hines, former White House Crypto Council director and now CEO of Tether U.S. Blumenthal questioned whether these ties have led to lax enforcement of Tether’s anti-money laundering obligations and sent letters to the Attorney General and Treasury Secretary urging investigation into possible sanctions violations.

Tether’s Response

Tether said Monday it has helped freeze $550 million in Iran-linked USDT over the past year. CEO Paolo Ardoino said public blockchains give authorities visibility into fund movements that cash cannot offer, and that Tether acts when law enforcement provides credible information.