Tether Faces Senate Scrutiny Over Iran-Linked USDT Wallets

TLDR

• A Senate Democratic report found 84% of 846 sanctioned Iran-linked wallets used USDT exclusively or nearly exclusively.
• Two sanctioned Iranian nationals received $603 million in USDT between 2021 and 2025, according to investigators.
• Tether says it helped freeze nearly $550 million in Iran-linked USDT during 2026.
• The company says it has helped freeze over $4.9 billion in assets globally across more than 2,900 investigations.
• Sen. Richard Blumenthal asked Treasury and the Justice Department to investigate Tether’s compliance.

Tether is facing new questions from U.S. Senate investigators over Iran’s use of its USDT stablecoin. A Sept. 28 report found that 84% of 846 sanctioned wallets tied to Iran and regional groups used USDT exclusively or nearly exclusively.

The report came from the Democratic minority staff of the Senate Permanent Subcommittee on Investigations. It is a preliminary report and not a bipartisan finding by the full Senate.

Investigators described USDT as a key part of Iran’s shadow banking network. They asked federal authorities to examine Tether’s sanctions and anti-money-laundering controls.

What the Senate Report Found

Staff reviewed more than five years of blockchain records. The wallets were flagged by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) or Israel’s National Bureau for Counter Terror Financing between June 2021 and August 2026.

Among 757 wallets named by the Israeli agency, 87% carried out more than 80% of their transaction value in USDT. Of 101 OFAC-designated wallets, 57% mainly used the stablecoin. Bitcoin ranked second in both groups.

The report said two sanctioned Iranian nationals, Alireza Derakhshan and Arash Estaki Alivand, received $603 million in USDT between 2021 and 2025. Investigators linked that network to Iranian oil sales and to entities tied to Hezbollah and the Houthis.

Two wallets attributed to Iran’s central bank received nearly $50 million in USDT in April and May 2025. Three wallets linked to Modex Exchange Company received close to $600 million over several months.

Investigators also questioned how fast Tether froze wallets. Israel flagged 39 wallets tied to a Hezbollah-linked financier in June 2023, but 34 were not frozen until March 2024. By then, more than $34.6 million in USDT had left them.

Tether Defends Its Record

Tether rejected the report’s portrayal. “Tether has consistently demonstrated that USDT is not a haven for sanctioned actors, terrorist organizations or criminal networks,” said CEO Paolo Ardoino.

The company said it helped freeze nearly $550 million in Iran-linked USDT during 2026. That includes more than $344 million across two wallets in April and over $130 million across four wallets in July, all tied to the Central Bank of Iran.

Blockchain firm Chainalysis reviewed the July wallets. It said they had received about $165 million in stablecoins, with $131 million left when Tether froze them.

Tether said it has supported more than 2,900 investigations worldwide, including over 1,600 with U.S. law enforcement. It said it has helped freeze more than $4.9 billion in total, with over $2.4 billion connected to U.S. authorities.

U.S. agencies have increased action on Iran-linked crypto this year. FinCEN warned banks in May about stablecoin use by Iranian facilitators, and OFAC designated the Iranian platform BitBank on Sept. 17.

On Sept. 14, federal prosecutors in New York filed a civil forfeiture complaint seeking about $61 million in crypto. They allege the funds came from black-market sales of sanctioned Iranian oil.

Sen. Richard Blumenthal, the subcommittee’s ranking Democrat, sent the findings to Treasury Secretary Scott Bessent and Attorney General Todd Blanche on Sept. 28. He asked both departments to investigate whether Tether broke federal law. The report said Tether had not answered an earlier June 4 letter seeking records.

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