A report from Senate Democrats claims that Tether, a stablecoin pegged to the U.S. dollar, has become a crucial instrument for the Iranian government to circumvent international sanctions.
The findings were released by the Senate's Permanent Subcommittee on Intelligence, which stated that Tether (USDT) is integral in enabling Iran to engage in transactions that evade global financial restrictions.
According to the report, "Iran's cryptocurrency-based shadow banking network has processed significant volumes of funds and implicates various Iranian interests," noting that Tether has inadequately blocked wallets associated with Iran.
It further asserted, "USDT has become a significant financial lifeline within Iran's shadow banking network." When Tether does take action to freeze wallets, the process can take weeks, and the company sometimes responds to requests without actually blacklisting the wallets, the report claims.
Prior to 2024, Tether allegedly did not consistently freeze wallets identified by counter-terrorism agencies and continues to struggle with proactively blocking clearly illicit wallets, which has allowed for misuse. The report mentioned that terrorist groups, including Hamas, have shifted from using Bitcoin and various cryptocurrencies to favoring USDT for transactions.
While the report did not provide a total figure for the amount of USDT allegedly used by the Iranian government, it estimated that Iran conducted around $2 billion in transactions last year.
The Wall Street Journal was the first to report on this document.
The report serves as a broader critique of cryptocurrencies, indicating that they actively undermine efforts by the U.S. and its allies to combat Iran’s regional terrorism.
In a blog post, Tether claimed to have "supported nearly $550 million in Iran-linked" wallet freezes, detailing actions taken at the request of U.S. authorities. Tether CEO Paolo Ardoino stated, "As governments intensify efforts to disrupt sanctions evasion and terrorist financing, we remain in regular and direct coordination with authorities in the United States and around the world to help ensure that illicit funds can be identified and frozen."