Tether has come under fresh U.S. Senate scrutiny after Democratic investigators found that 84% of 846 sanctioned or seizure-targeted crypto wallets linked to Iran and regional groups transacted exclusively, or nearly exclusively, in USDT.
Summary
- 84% of 846 sanctioned Iran-linked wallets transacted exclusively or nearly exclusively in USDT, investigators reported.
- Tether says it supported nearly $550 million in Iran-linked USDT freezes during 2026 enforcement actions.
- Senator Richard Blumenthal asked Treasury and Justice officials to investigate Tether’s sanctions and AML compliance.
- Two Iran-linked wallets held $344.2 million in USDT when OFAC designated them during April 2026.
- Chainalysis found four Central Bank of Iran wallets held $131 million when frozen in July.
The Senate Permanent Subcommittee on Investigations’ Democratic minority staff released the preliminary report on Sept. 28, describing USDT as a “significant financial lifeline” within Iran’s shadow banking network and asking federal authorities to examine Tether’s sanctions and anti-money-laundering controls. The findings represent the conclusions of the subcommittee’s Democratic investigators, not a bipartisan finding by the full Senate.
Tether disputed the report’s portrayal of its compliance record. In a company statement issued the same day, CEO Paolo Ardoino said USDT “is not a haven for sanctioned actors, terrorist organizations or criminal networks.” Tether said actions involving its stablecoin had supported nearly $550 million in Iran-linked asset freezes during 2026.
The company cited two major actions involving Central Bank of Iran-linked addresses. More than $344 million in USDT was frozen across two wallets in April, followed by over $130 million across four additional wallets in July after OFAC expanded the bank’s digital currency identifiers.
Tether USDT dominated the wallets examined by investigators
Drawing on more than five years of blockchain records, the minority staff reviewed 846 wallets identified by the U.S. Treasury’s Office of Foreign Assets Control or Israel’s National Bureau for Counter Terror Financing as associated with Iran and regional groups. The dataset covered designations from June 2021 through August 2026.
Within 757 wallets identified by the Israeli agency, investigators said 87% had conducted more than 80% of their transaction value in USDT. Among 101 OFAC-designated wallets connected to Iran or Iran-linked organizations, 57% predominantly used the stablecoin. Bitcoin ranked behind USDT in both samples, according to the report.
The report said two sanctioned Iranian nationals, Alireza Derakhshan and Arash Estaki Alivand, received $603 million in USDT between 2021 and 2025 through addresses later designated by OFAC. Senate investigators linked the network to Iranian oil sales and financial flows involving entities associated with Hezbollah and the Houthis, relying on sanctioned-wallet data and blockchain analytics.
A separate section examined two wallets that investigators attributed to Iran’s central bank using leaked documents and transaction records. The wallets received nearly $50 million exclusively in USDT during April and May 2025, the report said. Three wallets associated by investigators with Modex Exchange Company received close to $600 million in USDT over several months.
Outside the Senate inquiry, blockchain firms have independently identified large Iran-linked stablecoin flows. Elliptic reported in 2025 that 187 addresses identified by Israeli authorities as IRGC-linked had received $1.5 billion in USDT, while cautioning that it could not verify whether every transaction was directly connected to the IRGC because some addresses could belong to service providers handling funds for multiple customers.
Senate investigators question Tether’s wallet freezes
Investigators focused part of the report on how quickly Tether blacklisted wallets after government actions. Tether has issuer-level controls that can block USDT held at specific addresses, allowing the company to stop tokens from moving even while the underlying blockchain remains operational.
The minority staff alleged that some wallets remained active after counterterrorism designations. One example involved 39 wallets identified by Israel in June 2023 as connected to Hezbollah-linked financier Tawfiq Muhammad Sa’id Al-Law. The report said five were initially blacklisted, while another 34 were frozen in March 2024. Investigators calculated that more than $34.6 million in USDT left the wallets after the Israeli seizure notice.
Tether presents a different record of its enforcement work. The company said it works directly with OFAC, the Justice Department, FBI, Secret Service, Homeland Security Investigations and other agencies. Its Sept. 28 statement said it had supported more than 2,900 investigations globally, including more than 1,600 involving U.S. law enforcement, and had helped freeze over $4.9 billion across various cases.
During April, Tether said it froze more than $344 million across two addresses after receiving information from OFAC and U.S. law enforcement. OFAC formally added the two Tron addresses as digital currency identifiers for the Central Bank of Iran the next day.
As crypto.news previously reported, the April action froze $344 million in USDT tied by U.S. authorities to Iranian networks. A later July action froze roughly $131 million across four additional Central Bank of Iran-linked Tron wallets.
Chainalysis independently reviewed the July addresses and said the four wallets had received around $165 million in stablecoins, with $131 million remaining when Tether froze them. The analytics firm said Tether had frozen almost $475 million from OFAC-identified Central Bank of Iran addresses by that point.
U.S. agencies have increased scrutiny of Iran-linked crypto
Federal actions against Iranian digital asset networks have expanded during 2026. FinCEN warned financial institutions in May that Iranian facilitators could use stablecoins because of their liquidity, settlement speed and exchange-rate stability. The agency told financial institutions to watch for transactions involving foreign digital asset providers, unregistered peer-to-peer exchangers and other intermediaries that could support IRGC-linked financial activity.
Treasury followed with several enforcement actions. OFAC sanctioned Iranian exchanges during the year and, on Sept. 17, designated BitBank and related parties, describing the platform as part of Iran’s digital asset-based sanctions-evasion infrastructure.
Private blockchain researchers have documented comparable transaction patterns. TRM Labs traced more than $6.3 billion through Shelbit between May 2024 and March 2026 after OFAC sanctioned the exchange in August. Around 88% of the activity traveled over Tron, almost entirely through dollar-linked stablecoins, according to TRM.
Elliptic later said it traced around $71.8 million originating from Central Bank of Iran-linked funds into Shelbit following a multi-chain transaction route. The firm separately identified approximately $1.68 million moving from IRGC-attributed addresses to Shelbit and $2.3 million moving in the opposite direction.
Chainalysis estimated that sanctioned entities globally received 694% more crypto value in 2025 than a year earlier. Its data attributed more than $3 billion of Iranian crypto transfers during 2025 to the IRGC and associated networks, while stressing that illicit transactions still represented less than 1% of attributed global cryptocurrency volume.
In related coverage, crypto.news reported that Iranian businesses have increasingly used cryptocurrency for cross-border settlement as conventional banking access remains constrained by sanctions. The report cited industry data identifying USDT as the most common cryptocurrency in such payment activity.
Blumenthal asks Treasury and DOJ to investigate Tether
Sen. Richard Blumenthal, the ranking Democrat on the Permanent Subcommittee on Investigations, sent the findings to Treasury Secretary Scott Bessent and Attorney General Todd Blanche on Sept. 28. He asked both departments to examine Tether’s anti-money-laundering and sanctions compliance practices and determine whether federal laws had been violated.
The request follows an earlier June 4 inquiry in which Blumenthal sought records from Tether covering wallet freezes, sanctioned exchanges and the company’s view of its U.S. legal obligations. The Senate report states that Tether acknowledged receiving the June letter but had not provided a response by the time the Sept. 28 report was published.
Tether’s public response instead emphasized its cooperation with authorities. The company said the April and July actions brought Iran-linked USDT freezes during 2026 to nearly $550 million, while another 40 cases referred by Israel’s counterterrorism financing bureau involved more than 640 addresses and over 22 million USDT.
Separate federal litigation continues around Iran-linked crypto assets. On Sept. 14, the U.S. Attorney’s Office for the Southern District of New York filed a civil forfeiture complaint seeking approximately $61 million in cryptocurrency that prosecutors allege came from black-market sales of sanctioned Iranian oil and petroleum products intended to finance the Iranian government and military components, including the IRGC.
