Blumenthal report says 84% of Iran-sanctioned wallets used USDT; Tether cites $550m in 20…

A Senate subcommittee spotlights USDT’s role in Iran-linked sanctioned wallets, while Tether points to large-scale 2026 freezes—framing a policy fight over whether the stablecoin is risk or chokepoint.

A report from Democratic staff on the Senate Permanent Subcommittee on Investigations led by Senator Richard Blumenthal says 84% of 846 cryptocurrency wallets sanctioned or targeted for seizure over links to Iran and its proxies transacted exclusively or nearly exclusively in Tether’s USDT stablecoin. Blumenthal called USDT “a superhighway” for Iranian sanctions evasion in remarks on CNBC.

Where the 84% comes from

The report draws on blockchain records for wallets designated by the U.S. Treasury’s Office of Foreign Assets Control (OFAC) and Israel’s National Bureau for Counter Terror Financing between June 2021 and August 2026. The headline concentration rests more heavily on Israel’s designations: 87% of 757 wallets on that list transacted predominantly in USDT, versus 57% of 101 wallets on OFAC’s list.

The subcommittee also cites scale. It says two sanctioned Iranian oil smugglers, Alireza Derakhshan and Arash Estaki Alivand, moved more than $603 million in USDT between 2021 and 2025 through a network reaching Hezbollah, the Houthis and Iranian financial institutions, with evidence the same network was used to buy and sell drones and other military equipment.

The report argues Tether did not “comprehensively and consistently freeze” wallets designated by counter-terrorism agencies before 2024, noting one case where $34.6 million continued to move after designation. It says Tether has framed compliance with OFAC sanctions as “voluntary,” and adds that Hamas shifted from Bitcoin and a mix of tokens toward promoting USDT. Blumenthal has written to Treasury Secretary Scott Bessent and Attorney General Todd Blanche seeking investigations. He also pointed to Cantor Fitzgerald’s 5% stake in Tether and its role holding a large share of Tether’s assets, citing Bloomberg reporting that Tether lent money to the children of then–Commerce Secretary nominee Howard Lutnick to buy out his stake.

Tether answered the same day with a statement highlighting cooperation with law enforcement. It said actions involving USDT froze roughly $550 million across wallets U.S. authorities linked to Iran’s central bank during 2026, including more than $344 million in April and over $130 million in July. Across all cases, the company puts total freezes at more than $4.9 billion and says it has worked with over 340 agencies in 67 countries. “Public blockchains provide authorities with a level of visibility into the movement of funds that simply does not exist with cash,” CEO Paolo Ardoino said. The statement did not address the subcommittee’s specific findings.

Regulators have been widening their focus. In May, FinCEN issued an alert describing Iran’s use of stablecoins as including “minting and moving between large volume stablecoin issuers,” and in August, the Treasury gave itself authority to sanction any foreign person operating in Iran’s digital asset sector.

What to watch next

• Whether Treasury or the Justice Department open formal inquiries in response to Blumenthal’s letters.
• Any fuller Tether response addressing pre-2024 freezes and case-level handling of designated wallets.
• Further OFAC or Israeli designations and whether asset mix shifts over time are disclosed.
• Issuer blacklisting activity and timing relative to new designations.

This content is for informational purposes only and does not constitute financial advice.