A new Senate report alleges that Iran has turned to Tether's USDT stablecoin as a financial lifeline, using it to move money internationally and bypass sanctions on its banks. The report, led by Sen. Richard Blumenthal, examined 846 sanctioned cryptocurrency wallets connected to Iran and regional proxies, finding that 84% relied on USDT exclusively or nearly so. It also claims the network supports terrorist proxies and purchases of drones and military equipment.
Tether pushed back, stating it is "fully committed" to fighting illicit finance and noting it has helped freeze almost $550 million in USDT linked to Iran this year. CEO Paolo Ardoino emphasized that public blockchains offer authorities more visibility than cash, and that Tether acts when given credible information from law enforcement.
The report criticizes Tether for failing to consistently freeze flagged wallets before 2024 and for not proactively blocking clearly illicit ones. Blumenthal called on the Justice and Treasury departments to investigate potential sanctions violations. Separately, the Justice Department is reportedly examining whether Binance violated Iran sanctions by allowing certain crypto trades, with accusations of funneling $1.5 billion to Iran for black-market oil. The two cases highlight growing scrutiny of crypto's role in sanctions evasion, though Tether maintains it cooperates with authorities when alerted.