Tether USDT Under Scrutiny Over Role in Iran's Shadow Banking Network
A U.S. Senate investigation has raised concerns over the use of Tether's USDT stablecoin in Iran's shadow banking network. According to a report released by Sen. Richard Blumenthal, 84% of 846 cryptocurrency wallets sanctioned or targeted for seizure over links to Iran and its regional proxies had transacted exclusively or almost exclusively in USDT.
The investigation found that USDT was used as a major payment mechanism within cryptocurrency-linked financial networks associated with Iran. The report identified two sanctioned oil smugglers, Alireza Derakhshan and Arash Estaki Alivand, and said more than $603 million in USDT moved through networks connected to Hezbollah, the Houthis, and Iranian financial institutions over four years.
Tether rejected the suggestion that USDT functions as a safe haven for sanctioned entities and emphasized its cooperation with U.S. and international law enforcement. The company pointed out that it had frozen approximately $550 million in Iran-linked assets in 2026, including $344 million in April and $130 million in July.
The conflicting accounts put the effectiveness of stablecoin compliance controls at the center of the dispute. The Senate report focuses on historical wallet activity and alleged gaps in enforcement, while Tether points to subsequent freezes and cooperation with authorities.