U.S. Senate Democrats Say Tether Helped Iran Evade Sanctions, Urge Probe of AML Duties

A U.S. Senate investigation has raised allegations that Tether’s USDT was widely used to help Iran evade sanctions and finance terrorism.

The Block reported on September 28 that Democratic staff on the Senate Permanent Subcommittee on Investigations, led by Senator Richard Blumenthal, released a 28-page report analyzing 846 crypto wallets linked to Iran that were subject to sanctions or blocking measures. The report argued that Tether’s USDT plays a central role in Iran’s informal financial networks and fundraising activity.

According to the investigative staff, 87% of 757 wallets classified as being involved in Iran-linked terrorist financing primarily transacted in USDT. The staff cited USDT’s broad use on Iranian crypto exchanges and greater liquidity than other stablecoins as the main reasons.

The report said Tether repeatedly failed to freeze wallets tied to illicit financial activity. It argued that the company did not take adequate action even when public information showed links to Iran-related entities or terrorist organizations. Blumenthal sent a letter to Deputy Attorney General Todd Blanche and Treasury Secretary Scott Bessent urging them to investigate whether Tether may have violated sanctions and banking laws.

Tether’s personnel and business ties to the Trump administration were also part of the inquiry. The report noted that Commerce Secretary Howard Lutnick previously served as chief executive officer of Cantor Fitzgerald, which handles custody work for Tether, and that Bo Hines, the former executive director of the White House crypto council, now serves as chief executive officer of Tether’s U.S. entity. Blumenthal argued that those ties warrant scrutiny of whether Tether’s anti-money-laundering obligations have been adequately overseen.

Tether pushed back in a statement issued the same day, saying it had helped freeze about $550 million of USDT linked to Iran over the past year. Chief Executive Officer Paolo Ardoino said USDT is not a safe vehicle for sanctioned actors or terrorist groups to hide funds and that public blockchains allow money flows to be tracked more transparently than cash.

The report contains allegations raised by Democratic investigators and does not establish that Tether violated the law. Still, it points to the possibility of broader congressional scrutiny of Iran’s use of crypto and stablecoin issuers’ obligations to comply with sanctions.