Senate Democrats released a report on September 28, 2026, examining the role of Tether's USDT stablecoin in Iran's financial networks. The 28-page document, titled "Tethered to Terrorism: Crypto & Iran's Shadow Banking Network," analyzed 846 crypto wallets sanctioned or targeted for seizure 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.
The report found that 84% of the sanctioned wallets tied to Iran and affiliated proxies transacted primarily in USDT. Among wallets flagged by Israel, 87% transacted mainly in USDT, compared to 57% of those designated by OFAC. The analysis highlighted a network of sanctioned oil smugglers that moved over $603 million in USDT during the period studied.
The report frames USDT as a financial tool for Iran's shadow banking network and links fund flows to Iranian proxies including Hezbollah and Hamas.
Tether's Response
Tether stated it had frozen approximately $550 million in Iran-affiliated USDT during 2026, including $344 million in April 2026 tied to two wallets identified with Iran's Central Bank. However, the report suggests inconsistencies in how Tether enforced wallet freezes before 2024, indicating the company's enforcement was uneven in earlier years.
Federal Investigation
Senator Richard Blumenthal of Connecticut referred the findings for further investigation into whether Tether complied with US sanctions and anti-money laundering rules. The Treasury Department and Justice Department were asked to respond by October 9, 2026.
The report was prepared by minority staff on the Senate Permanent Subcommittee on Investigations and does not represent an official committee finding.
