A US Senate report published on Monday claims that Iran’s regime has engaged in “rampant” utilization of Tether’s dollar-pegged stablecoin, USDT, in order to circumvent American sanctions, facilitate transfers of value across the global financial system and maintain a covert banking infrastructure linked to Tehran. Senate Report Iran Tether USDT
The report, compiled by the Senate’s Permanent Subcommittee on Investigations, looked into 846 cryptocurrency wallets that had been sanctioned, or had been earmarked for seizure, for their alleged ties to Iran or its regional proxy organizations.
Investigators uncovered that 84 per cent of these addresses were transacting almost exclusively in the stablecoin, suggesting that they were using USDT as a workaround to banking restrictions imposed on them.
Senator Richard Blumenthal, the ranking democrat on the committee, said that the findings showed how Tether has become a critical enabler for Iran to transfer value, prop up its currency, and acquire military hardware, including drones.
The report also ties the stablecoin to the funding of Hezbollah, and other groups which are officially considered terrorist proxies by Washington.
Much of the criticism in the report centres on Tether’s compliance record, with investigators arguing the company was slow and inconsistent in freezing wallets connected to illicit Iranian activity, particularly in the years before 2024.
Responding to the report on Monday, Tether said it had frozen approximately $550 million in wallets during 2026 that US authorities had identified as linked to Iran’s central bank and broader sanctions networks.
The company said it continues to cooperate with US and international law enforcement agencies on tracking and blocking sanctioned funds.
The disclosure adds to a growing body of evidence, cited separately by The Wall Street Journal, showing how cryptocurrency has given sanctioned states and armed groups an avenue to bypass conventional financial oversight.
It follows a string of related US actions this year, including sanctions against a crypto exchange accused of processing payments for Iran’s Revolutionary Guard, and Treasury appeals for international whistleblowers to expose financial networks supporting Tehran.
The findings are likely to intensify scrutiny of stablecoin issuers’ compliance obligations, as regulators weigh how far crypto platforms must go to prevent sanctioned actors from exploiting digital currencies for illicit financial flows. Alawasat News
