Tether Accused of Fueling Iran's Shadow Banking System with $550 Million in Frozen Funds

A new Senate report has accused Tether's USDT stablecoin of being central to Iran's shadow banking system, allowing the government to fund its regional proxies and commit human rights abuses.

The report, led by Sen. Richard Blumenthal, analyzed blockchain transaction data from 846 crypto wallets associated with Iran and found that 87% of 757 wallets implicated in Iranian terrorism financing predominantly transacted in USDT.

Tether's connection to the Trump administration has also been highlighted, including through Commerce Secretary Howard Lutnick, who led Cantor Fitzgerald before joining the administration. The report urges Attorney General Todd Blanche and Treasury Secretary Scott Bessent to investigate potential sanctions and banking law violations.

Tether has responded by saying it has helped freeze $550 million in USDT linked to Iran over the past year, but Blumenthal remains concerned that Tether's lax enforcement and lenient oversight may be contributing to national security risks.