Crypto28 September, 20262 min read
Senate Democrats Say Tether USDT Funds Iran, Including Hezbollah, Bypassing US Sanctions
This article is an automated aggregation of coverage from news outlets. Our editorials offer in-depth analysis curated by the NewsCord team.
Senate report says Tether USDT is a significant financial lifeline for Iran. The report links USDT to funding Iran’s proxies, including Hezbollah.
9 outlets told this the same way.
Senate targets USDT
A report led by Senate Democrats said Tether's USDT has become a "significant financial lifeline" for Iran and a tool for funding proxy organizations, including Hezbollah. The report analyzed 846 crypto wallets sanctioned by Israel and the US in connection with Iran and found that 84% transacted in USDT, including to help the Iranian government move money across its borders and support its currency amid US sanctions.
Senator Richard Blumenthal said the report "exposes how Tether and its flagship token have become central to Iran’s shadow banking system," and he called for the Treasury and Justice Departments to investigate Tether. Tether responded that it supported the freezing of nearly $550 million in Iran-linked USDT in 2026 and said it was committed to cooperating with the US government.
Wallet freezes disputed
The Senate Democrats' report said Tether "repeatedly failed" to block Iran-connected wallets and that, when Tether does freeze wallets, it sometimes takes weeks. The report also said that "Prior to 2024, Tether did not comprehensively and consistently freeze wallets designated by counter-terrorism agencies" and claimed that this absence of deterrence invited abuse.
Tether CEO Paolo Ardoino said in a statement that "Tether has consistently demonstrated that USD₮ is not a haven for sanctioned actors, terrorist organizations or criminal networks," and he argued that the company coordinates with authorities. The Senate Democrats' case also included an allegation that terrorist organizations such as Hamas shifted from transacting in Bitcoin and a mix of cryptocurrencies to promoting USDT.
Compliance stakes rise
The Senate Democrats' report cast Iran's use of USDT as an indictment of crypto more generally, saying "cryptocurrencies are actively undermining the attempts of the United States and its allies to prevent the Islamic Republic's regional terrorism." The report estimated that the Iranian government made an estimated $2 billion in transactions last year, while Reuters reported that the report analyzed 846 crypto wallets and found 84% transacted in USDT.
The dispute now centers on enforcement, with the report alleging delays or incomplete responses to requests to freeze Iran-linked wallets, while Tether said it supported freezes of nearly $550 million in Iran-linked USDT in 2026. The Treasury Department stepped up sanctions after the start of the US military campaign against Iran this year, and Reuters said last month it launched Operation Economic Outcast, which included a focus on crypto transactions.