Senator Blumenthal's Report Links Tether's USDT to Iranian Sanctions Evasion
Senator Richard Blumenthal (D-CT) has released a report indicating that a significant majority of cryptocurrency wallets associated with Iran and its proxies have transacted primarily in Tether's USDT stablecoin. According to the report, titled "Tethered to Terrorism," 84% of the 846 wallets analyzed were linked to USDT, highlighting its role as a preferred payment method for entities evading sanctions.
The report, compiled by Democratic staff on the Senate Permanent Subcommittee on Investigations, draws on blockchain data from wallets designated by the Treasury's Office of Foreign Assets Control (OFAC) and Israel's National Bureau for Counter Terror Financing between June 2021 and August 2026. Notably, 87% of the wallets identified by the Israeli bureau were found to predominantly use USDT, compared to 57% of those designated by OFAC.
Blumenthal's findings suggest that Tether operates as a "superhighway" for the Iranian government, facilitating not only sanctions evasion but also supporting terrorist activities and human rights abuses. The report details how two sanctioned Iranian oil smugglers, Alireza Derakhshan and Arash Estaki Alivand, moved over $603 million in USDT through a network that reached various terrorist organizations and Iranian financial institutions.
The report criticizes Tether for its lack of compliance with sanctions, noting that prior to 2024, the company did not consistently freeze wallets identified by counter-terrorism agencies. In one instance, $34.6 million continued to flow through sanctioned wallets even after they were designated. Tether has characterized its compliance with OFAC sanctions as "voluntary," a stance that contrasts sharply with the obligations imposed on traditional financial institutions.
Blumenthal Calls for Investigation into Tether
In a letter to Treasury Secretary Scott Bessent and Attorney General Todd Blanche, Blumenthal urged an investigation into Tether's anti-money laundering practices and its compliance with sanctions. He expressed concern that the current oversight of cryptocurrency firms has compromised national security interests, particularly pointing to Cantor Fitzgerald's ownership stake in Tether and its connections to high-ranking officials.
The subcommittee had previously sought information from Tether regarding its handling of Iranian transactions, but the company had not responded by the time of the report's publication. During a recent appearance on CNBC, Blumenthal reiterated his concerns, stating that Tether is not merely a pathway for sanctions evasion but a significant facilitator of money laundering and trafficking.
Clearance Granted
In response to the report, Tether issued a statement asserting its cooperation with law enforcement, claiming to have frozen approximately $550 million linked to Iran's central bank during 2026. The company emphasized that public blockchains provide a level of transparency that cash transactions do not, although it did not address the specific findings of the Senate report.
The report also highlights the broader implications of Iran's use of stablecoins, with FinCEN previously issuing alerts regarding the minting and movement of stablecoins within the country. As the Treasury expands its sanctions capabilities, the scrutiny on cryptocurrency firms like Tether is likely to intensify.
