Tether is facing renewed scrutiny from the US Senate after Democratic investigators found that 84% of 846 cryptocurrency wallets linked to Iran and regional groups used USDT exclusively or almost exclusively.
The preliminary report, released on 28 September by Democratic staff on the Senate Permanent Subcommittee on Investigations, described USDT as a “significant financial lifeline” for Iran’s shadow banking network. It stressed that the findings were not bipartisan conclusions of the full Senate.
The investigators reviewed more than five years of blockchain records covering wallets designated by the US Treasury’s Office of Foreign Assets Control (OFAC) or Israel’s National Bureau for Counter Terror Financing between June 2021 and August 2026.
Of 757 wallets identified by the Israeli agency, 87% conducted more than 80% of their transaction value in USDT. Among 101 OFAC-designated wallets linked to Iran or Iranian organisations, 57% mainly used the stablecoin. Bitcoin was the second most-used cryptocurrency in both groups.
The report said Iranian nationals Alireza Derakhshan and Arash Estaki Alivand received $603 million in USDT between 2021 and 2025 through addresses later designated by OFAC. Investigators associated the wider network with Iranian oil sales and financial activity involving entities linked to Hezbollah and the Houthis.
Two wallets attributed to Iran’s central bank received almost $50 million exclusively in USDT during April and May 2025, while three wallets linked by investigators to Modex Exchange Company received nearly $600 million over several months.
Elliptic reported in 2025 that 187 addresses identified by Israel as linked to the IRGC had received $1.5 billion in USDT. The company cautioned that it could not confirm every transaction was directly connected to the IRGC because some addresses might belong to service providers handling funds for several customers.
Tether disputes report’s findings
Tether rejected the report’s description of its compliance record. Chief executive Paolo Ardoino said USDT “is not a haven for sanctioned actors, terrorist organizations or criminal networks”.
The company said it had supported nearly $550 million in Iran-linked USDT freezes during 2026. More than $344 million was frozen across two Central Bank of Iran-linked wallets in April, followed by more than $130 million across four wallets in July after OFAC expanded the bank’s digital currency identifiers.
Chainalysis said the four July wallets had received about $165 million in stablecoins and held $131 million when frozen. It said Tether had by then frozen almost $475 million from OFAC-identified Central Bank of Iran addresses.
Investigators questioned the speed of some blacklist actions. They said five of 39 wallets identified by Israel in June 2023 as linked to Hezbollah financier Tawfiq Muhammad Sa’id Al-Law were initially blacklisted, with the remaining 34 frozen in March 2024. More than $34.6 million in USDT allegedly left those wallets after the seizure notice.
Tether said it worked with OFAC, the Justice Department, FBI, Secret Service and Homeland Security Investigations. It reported supporting more than 2,900 investigations globally, including more than 1,600 involving US law enforcement, and helping freeze more than $4.9 billion.
Senator Richard Blumenthal, the subcommittee’s ranking Democrat, asked Treasury Secretary Scott Bessent and Attorney General Todd Blanche to investigate Tether’s sanctions and anti-money-laundering controls and establish whether federal laws had been breached.
The request followed a 4 June inquiry seeking records on wallet freezes, sanctioned exchanges and Tether’s US legal obligations. The report said the company acknowledged receiving that letter but had not replied by 28 September.
US scrutiny of Iran-linked crypto networks has intensified in 2026. FinCEN warned in May that Iranian facilitators could exploit stablecoins’ liquidity, settlement speed and exchange-rate stability. OFAC later sanctioned BitBank and related parties on 17 September, calling it part of Iran’s sanctions-evasion infrastructure.
TRM Labs traced more than $6.3 billion through Shelbit between May 2024 and March 2026, with about 88% moving via Tron and almost entirely through dollar-linked stablecoins. Elliptic identified $71.8 million from Central Bank of Iran-linked funds entering Shelbit, $1.68 million moving from IRGC-attributed addresses to the exchange and $2.3 million in the opposite direction.
Chainalysis said sanctioned entities globally received 694% more cryptocurrency value in 2025 than in 2024. It attributed more than $3 billion in Iranian crypto transfers during 2025 to the IRGC and associated networks, while saying illicit activity remained below 1% of global attributed cryptocurrency volume.
The US Attorney’s Office for the Southern District of New York also filed a civil forfeiture complaint on 14 September seeking about $61 million in cryptocurrency allegedly generated by sanctioned Iranian oil and petroleum sales.
