Tether Says It's the Firefighter; Senate Report Says USDT Is the Fire 🚒

Tether pushed back on Monday against findings from U.S. Senate Democrats that USDT has become the dominant payment rail for Iranian sanctions evasion, saying the stablecoin issuer has frozen nearly $550 million in Iran-linked USDT this year at the request of U.S. authorities. The company said it had frozen more than $130 million across four wallets during 2026 and, separately, more than $344 million linked to the Central Bank of Iran in April.

A report released by Democratic staff on the Senate Permanent Subcommittee on Investigations, titled "Tethered to Terrorism," analyzed blockchain records for 846 crypto wallets designated by the Treasury's Office of Foreign Assets Control and Israel's National Bureau for Counter Terror Financing between June 2021 and August 2026. According to the Wall Street Journal, which reported the findings on September 28, roughly 84% of those wallets transacted exclusively or nearly exclusively in USDT. The share reached 87% of the 757 wallets designated by the Israeli bureau and 57% of the 101 designated by OFAC. The report cited at least $507 million in USDT accumulated by Iran's Central Bank and more than $603 million in USDT moved between 2021 and 2025 by sanctioned Iranian oil smugglers Alireza Derakhshan and Arash Estaki Alivand, with the network allegedly reaching Hezbollah, the Houthis and Iranian financial institutions and showing evidence of drone and military equipment transactions.

Senator Richard Blumenthal (D-CT), the subcommittee's ranking member, called USDT "a superhighway for the Iranian government to evade sanctions, carry out hostile drone & missile campaigns, & commit human rights abuses" in remarks on CNBC's Squawk Box on Tuesday, and has asked Treasury Secretary Scott Bessent and Attorney General Todd Blanche to investigate Tether's anti-money laundering and sanctions compliance. The report notes that before 2024, Tether did not "comprehensively and consistently freeze" wallets designated by counter-terrorism agencies and that in one case $34.6 million continued to move through sanctioned wallets after designation. It also references Bloomberg reporting from March that Cantor Fitzgerald, which owns 5% of Tether and holds a large share of its assets, lent money to the children of Commerce Secretary Howard Lutnick to buy out their father's stake when he divested on nomination.

Tether CEO Paolo Ardoino defended the company's record, stating, "Tether has consistently demonstrated that USDT is not a haven for sanctioned actors, terrorist organizations or criminal networks," and adding that cooperation with authorities globally had resulted in more than $4.9 billion in assets being frozen, including more than $2.4 billion connected to U.S. authorities such as the DOJ, FBI, Secret Service, HSI and OFAC. The subcommittee wrote to Tether in June seeking information on its handling of Iranian transactions; the company confirmed receipt but had not replied by publication of the Senate report. Tether's response comes as the findings land alongside the U.S. Treasury's Operation Economic Outcast campaign to cut Iran and the Islamic Revolutionary Guard Corps off from the international financial system.