Sen. Blumenthal Urges Treasury and DOJ to Investigate Tether Over Iran’s Use of USDT

Iran and its regional proxies rely on Tether’s USDT more than any other cryptocurrency to move money around sanctions, according to a report released Monday by Democratic staff of the Senate Permanent Subcommittee on Investigations.

The staff, who work for ranking member Richard Blumenthal of Connecticut, analyzed the transactions of 846 wallets that the U.S. Treasury’s Office of Foreign Assets Control (OFAC) and Israel’s counter-terror financing bureau have sanctioned or targeted for seizure over links to Iran, Hamas, Hezbollah and the Houthis. The report says 84% of them “have transacted exclusively, or nearly exclusively, in USDT.” The staff describe their findings as preliminary.

The share was 87% for the 757 wallets on Israel’s list and 57% for the 101 on OFAC’s, counting a wallet when more than 80% of its dollar volume was in USDT. Bitcoin came a distant second on both.

Blumenthal asked Treasury Secretary Scott Bessent and Attorney General Todd Blanche to investigate Tether’s anti-money laundering and sanctions compliance, and to tell the subcommittee by Oct. 9 whether either department narrowed, paused or closed any earlier inquiry into the company. The letters cite reports that Manhattan federal prosecutors opened a Tether investigation in October 2024 and that Treasury weighed sanctioning the company. They also say Cantor Fitzgerald owns 5% of Tether and that the firm “until recently was run by Commerce Secretary Howard Lutnick” before his children took control.

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As the issuer, Tether can blacklist a USDT wallet so its funds can’t move. The report says Tether didn’t appear to freeze any wallets Israel designated from 2021 to May 2023, and the staff wrote in the report that its freezing since then has been “uneven and inconsistent.” In June 2023, Israel designated 39 wallets tied to Tawfiq Muhammad Sa’id Al-Law, whom the report calls a Hezbollah money launderer. Tether froze just five and did not freeze the other 34 until March 2024, shortly before OFAC also sanctioned Al-Law, according to the report. More than $34.6 million in USDT left those wallets in between, the staff found.

The report also faults Tether for not acting on its own against wallets not named in any sanctions or seizure notice, including Central Bank of Iran wallets that sanctioned Iranian financier Babak Zanjani posted on X in December 2025. Tether confirmed receiving the subcommittee’s June request for documents but has not responded, the report says.

Tether published a release Monday morning saying freezes it supported this year have locked up about $550 million in Iran-linked USDT. It also says it has frozen more than 22 million USDT across more than 640 addresses in cases referred by Israel’s counter-terror financing bureau. The release did not mention the report.

“Tether has consistently demonstrated that USD₮ is not a haven for sanctioned actors, terrorist organizations or criminal networks,” CEO Paolo Ardoino said in the release.

The report comes a month after Treasury named digital assets a sanctionable sector of Iran’s economy.

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