Senate Report Says Iran Relies Heavily on Tether's USDT for Sanctions Evasion

According to Senate Democrats, over 800 crypto wallets tied to Iranian sanctions used Tether's USDT in 84% of cases, either exclusively or as the main token. On the same day, Tether reported assisting in freezing roughly $550 million worth of Iran-linked USDT this year.

USDT is a stablecoin, a digital currency designed to maintain a one-to-one value with the US dollar. Tether, the issuing company, retains the ability to freeze any wallet holding the token.

What Senate Democrats Say About Tether and Iran

The conclusions came from Democratic members of the Senate Permanent Subcommittee on Investigations (PSI), headed by ranking member Sen. Richard Blumenthal. The Wall Street Journal was the first to report the findings.

A Senate investigation has found that Iran relies heavily on Tether's USDT stablecoin to bypass U.S. sanctions and reach the international financial system. Investigators say the token has become a major payment channel for the regime and has appeared in networks financing…

— Open Source Intel (@Osint613) September 28, 2026

Investigators described USDT as a primary payment method for Tehran. They also stated it appeared in funding networks for Iran-backed groups, such as Hezbollah.

In a June letter, Blumenthal noted that sanctioned Iranian exchanges still conducted significant amounts of USDT trading. He asked whether Tether had ever turned down requests to block illicit wallets.

This pressure aligns with Treasury's efforts. In August, the department launched Operation Economic Outcast, identifying digital assets as one of five Iranian sectors subject to sanctions.

How Tether Says Its Freezes Answer the Senate

Tether's statement points to two actions. In April, $344 million was frozen across two wallets. The Office of Foreign Assets Control (OFAC), the agency overseeing US sanctions, later linked both wallets to Iran's central bank.

In July, Tether froze over $130 million across four wallets on Tron, a blockchain network known for low fees. BeInCrypto reported at the time that the Tether kill switch was activated within hours of OFAC's listing.

“Public blockchains provide authorities with a level of visibility into the movement of funds that simply does not exist with cash, and Tether can act when credible information is provided by law enforcement,” read an excerpt in the statement, citing Tether CEO, Paolo Ardoino.

Where the Senate and Tether Figures Differ

The two sets of numbers measure unrelated aspects. The Senate's 84% figure accounts for wallets after they were sanctioned. Tether's $550 million figure refers to funds it froze once authorities identified the wallets.

Tether's own calculations also show a discrepancy. The two specified freezes total roughly $475 million, and the statement does not detail the remaining $75 million.

Neither Tether's announcement nor the Senate findings, as reported, specify how much USDT moved through those wallets before the freezes occurred. That is the record Blumenthal has requested from Tether.