Tether Tangled Up in Iran Sanctions Probe: 84% of Wallets Trade USDT

Tether's USDT stablecoin has been at the center of a probe into how Iran, Hamas, Hezbollah, and the Houthis move money outside the traditional banking system. According to a Senate minority report, 84% of digital wallets in an Iran-focused sanctions probe traded exclusively or almost exclusively in USDT.

The report found that Tether's stablecoin was heavily relied upon by Iranian shadow banking networks and was used for sanctions evasion. The finding does not establish that Tether financed the Iranian government or its proxies, but rather highlights the company's role in facilitating transactions for these groups.

Separate US enforcement actions and blockchain analysis have documented USDT's use in financial networks connected to all four groups. In one instance, OFAC identified two addresses frozen by Tether as digital-currency identifiers for Iran's central bank. Tether claims it supports freezes of more than $344 million across these two addresses.

The Senate minority has requested that Treasury Secretary Scott Bessent examine Tether's sanctions and anti-money-laundering controls, citing concerns over the company's ability to blacklist wallets that had already been identified as illicit.