Senate Report Links Tether USDT to 84% of Iran-Linked Wallets in New Sanctions Review

Tether’s USDT has become the focus of a fresh US sanctions debate after Senate Democratic investigators said the stablecoin was widely used across crypto wallets linked to Iran and sanctioned groups.

A report from the Senate Permanent Subcommittee on Investigations found that 84% of 846 wallets sanctioned by US or Israeli authorities between June 2021 and August 2026 had transacted exclusively or almost exclusively in USDT.

The findings have prompted Senator Richard Blumenthal to call for the Treasury and Justice departments to investigate potential sanctions violations involving the stablecoin.

84% Of Iran-Linked Wallets Used USDT

The Senate report examined wallets connected to Iran, Hamas, Hezbollah and the Houthis.

According to the investigators, USDT was the main crypto asset used across most of the sanctioned wallets reviewed.

The report said the findings showed how the dollar-pegged stablecoin had become an important channel for moving funds linked to Iran and its regional networks despite US sanctions.

The report does not establish that Tether knowingly facilitated the transactions.

Blumenthal said the findings pointed to Tether and USDT becoming central to what he described as Iran’s “shadow banking system”, which he said helped fund proxy groups as well as Iran’s drone and missile programmes.

Tether Says It Has Helped Freeze $550 Million

Tether has pushed back against the idea that USDT provides a safe channel for sanctioned actors, pointing instead to its cooperation with law enforcement.

The company said it helped authorities freeze nearly $550 million in USDT linked to Iran during 2026.

More than $344 million was frozen in April across two addresses linked to Iran’s Central Bank, while more than $130 million was frozen across four wallets later in the year.

Tether CEO Paolo Ardoino said,

“Tether has consistently demonstrated that USDT is not a haven for sanctioned actors, terrorist organizations or criminal networks.”

Tether said its cooperation with more than 340 law enforcement agencies across 67 countries has contributed to more than $4.9 billion in frozen assets, including over $2.4 billion connected to US authorities.

Ardoino said,

“The record is public: the DOJ, FBI, Secret Service, HSI, OFAC and authorities around the world have repeatedly worked with Tether to trace, freeze and recover assets. We will continue to make that capability available to authorities working to stop terrorism, sanctions evasion, fraud and other serious crimes.”

US Sanctions Pressure Is Already Growing

The Senate report comes as Washington has increased its focus on Iranian crypto activity.

The US Treasury sanctioned Nobitex and three other Iranian digital-asset exchanges in June, followed by sanctions against two more exchanges in August over allegations that Iranian actors used crypto platforms to move funds and evade sanctions.

OFAC now treats Iranian digital-asset exchanges as blocked Iranian financial institutions.

The report also criticised Tether over the timing of some wallet freezes, arguing that the company did not always freeze USDT quickly after wallets were sanctioned by US or Israeli authorities.

Tether can freeze USDT held in specific wallets and, where required, re-create the tokens in another wallet, giving the issuer a level of control that differs from many other crypto assets.

Could USDT Face More Pressure Under US Stablecoin Rules?

The findings arrive as the US builds a new regulatory framework for stablecoins through the GENIUS Act.

The US framework is not the same as Europe’s MiCA regime, which has already placed restrictions on stablecoin issuers operating in the European market.

However, the new US rules give Washington tools to put pressure on foreign stablecoin issuers that do not meet US requirements.

Foreign-issued stablecoins generally cannot be made available by US digital-asset service providers unless their issuers can comply with lawful US orders.

The Treasury can also designate a foreign issuer as non-compliant and, after the required process, prohibit US service providers from facilitating secondary trading in its stablecoins.

Broader foreign-issuer restrictions are expected to begin taking effect in 2027.

The 84% figure does not itself impose any restriction on Tether, but it adds to scrutiny of how foreign-issued stablecoins are used in sanctions-related transactions.

Iran’s Use Of USDT May Already Be Changing

Blockchain data cited in the Senate report also suggests Iran’s reliance on USDT may be changing.

TRM Labs found that USDT accounted for 72% of transactions across wallets attributed to Iran in 2024, falling to 67% in 2025.

By August 2026, USDT represented 14% of on-chain volume across those wallets.

The figures suggest that while USDT remains closely tied to the debate over Iran’s crypto activity, its share of Iranian-linked on-chain transactions has not remained constant.