On September 28 local time, Senator Richard Blumenthal, the ranking Democratic member of the U.S. Senate Permanent Subcommittee on Investigations, released a report by the subcommittee's Democratic staff alleging that Tether's dollar stablecoin USDT had been used to evade sanctions on Iran. Blumenthal asked the Treasury and Justice departments to investigate Tether's anti-money-laundering and sanctions-compliance practices and determine whether the company violated relevant laws, with strong enforcement if violations are found. He also requested information by October 9 on whether investigations of Tether exist and how they are progressing.
The report analyzed transactions involving 846 crypto-asset wallets linked to the Iranian government and regional proxies that had been designated for sanctions or seizure by U.S. or Israeli authorities. It said 84% of the wallets transacted only or almost exclusively in USDT. According to the report, Israeli authorities designated 39 Hezbollah-linked wallets in June 2023, but Tether did not freeze 34 of them until March 2024, excluding five that it had frozen earlier. The report estimated that more than $34.6 million in USDT left the wallets after the seizure notice became public. It argues that Tether failed to freeze some designated wallets promptly and did not proactively block wallets despite public information indicating links to Iran or terrorist organizations. The report alleges that these shortcomings facilitated Iran's sanctions evasion and the movement of funds by terrorist groups.
In a statement the same day, Tether said it had assisted in freezing approximately $550 million in Iran-linked USDT during 2026. Chief Executive Paolo Ardoino emphasized that public blockchains allow funds to be traced and that Tether can act when law-enforcement agencies provide reliable information.