Summary

  • Staff from the Senate Permanent Subcommittee on Investigations reviewed 846 wallets associated with Iran and its affiliates.
  • They discovered that 84% of these wallets operated primarily with Tether's USDT.
  • On the same day, Tether announced that it had frozen $550 million linked to Iran this year, without directly addressing the report's findings.

A detailed analysis of 846 cryptocurrency wallets identified as sanctioned or targeted for seizure due to their connections to Iran shows that 84% predominantly used Tether's USDT stablecoin, as highlighted in a report issued by Senator Richard Blumenthal (D-CT).

The report, titled "Tethered to Terrorism," originates from the Democratic staff of the Senate Permanent Subcommittee on Investigations, where Blumenthal serves as the ranking member. It utilizes blockchain data for wallets flagged by the Treasury's Office of Foreign Assets Control and Israel's National Bureau for Counter Terror Financing, covering the period from June 2021 to August 2026. The statistics reveal that 87% of the 757 wallets identified by the Israeli bureau operated mainly in USDT, compared to 57% of the 101 wallets flagged by OFAC.

Tether functions as a favored payment method for terrorist entities—acting as a superhighway for the Iranian regime to bypass sanctions, conduct aggressive drone and missile operations, and perpetrate human rights violations. I joined @SquawkCNBC to elaborate on my latest report. pic.twitter.com/Nnl20M589I

— Richard Blumenthal (@SenBlumenthal) September 29, 2026

The report also highlights the extensive scale of transactions. Two sanctioned Iranian oil traffickers, Alireza Derakhshan and Arash Estaki Alivand, transferred over $603 million in USDT from 2021 to 2025, engaging a network that connected with Hizballah, the Houthis, and Iranian financial entities. The subcommittee asserts that this network likely facilitated the trade of drones and other military supplies.

Prior to 2024, the report notes, Tether failed to “comprehensively and consistently freeze” wallets identified by counter-terrorism agencies, with around $34.6 million continuing to flow through sanctioned wallets after their identification. It mentions that Tether has characterized its compliance with OFAC sanctions as "voluntary" and claims adherence to OFAC "guidelines," contrasting this with the mandatory obligations for banks. Furthermore, it points out that Hamas has transitioned from Bitcoin and various tokens to favoring USDT.

Blumenthal has reached out to Treasury Secretary Scott Bessent and Attorney General Todd Blanche, urging both departments to investigate Tether's compliance with anti-money laundering and sanctions regulations. He asserts that the administration's oversight of cryptocurrency companies has "compromised our national security interests," referencing Cantor Fitzgerald, which owns a 5% stake in Tether and holds a significant portion of its assets, previously managed by Commerce Secretary Howard Lutnick and now by his children. The report cites Bloomberg reporting from March indicating that Tether extended loans to Lutnick's children for their buyout of his stake following his nomination.