Senate Report Accuses Tether of Facilitating Iran Sanctions Evasion

Senate Democrats have released a report highlighting concerns that Tether's USDT stablecoin is being used to evade sanctions against Iran. Published on September 28, 2026, the report, titled 'Tethered to Terrorism: Crypto & Iran’s Shadow Banking Network,' argues that USDT has become a key tool in Iran's financial maneuvers to bypass restrictions.

The 28-page document examined 846 crypto wallets sanctioned or targeted for seizure between June 2021 and August 2026. It found that 84% of these wallets, linked to Iran and its proxies, primarily transacted in USDT. The figure rose to 87% for wallets flagged by Israel and 57% for those designated by the US Treasury's Office of Foreign Assets Control (OFAC). The report suggests USDT is a critical financial lifeline for Iran’s shadow banking operations, including support for groups like Hezbollah and Hamas.

Tether responded by asserting it had frozen approximately $550 million in USDT tied to Iran-affiliated entities in 2026. This included $344 million linked to the Central Bank of Iran in April 2026. However, the report points out inconsistencies in Tether's enforcement actions before 2024, suggesting its compliance measures were uneven in earlier years.

Senator Richard Blumenthal has referred the findings for further investigation, asking the Treasury and Justice Departments to review whether Tether complied with US sanctions and anti-money laundering rules. The agencies have until October 9, 2026, to respond.