Senate probe finds Iran relied heavily on Tether to evade sanctions

A Senate Democratic investigation found that Iran relied heavily on Tether to move money outside the traditional banking system. The investigation found that 84% of 846 sanctioned Iran-linked crypto wallets transacted exclusively or almost exclusively in USDT. The wallets analyzed had been sanctioned by the United States or Israel over ties to Iran and its regional proxies. The report said USDT helped Tehran move money across borders and support the rial despite U.S. sanctions. Sen. Richard Blumenthal, the top Democrat on the Permanent Subcommittee on Investigations, told The Wall Street Journal that Tether had become central to Iran's shadow banking system. The subcommittee referred its findings to the Justice and Treasury departments. Investigators said Tether repeatedly failed to block wallets tied to Iranian exchanges, brokers and terrorist organizations. Investigators said Tether sometimes took weeks to act. Investigators said $34.6 million continued moving through wallets after authorities sanctioned them. Tether said it had helped freeze nearly $550 million in Iran-linked USDT this year. Tether said it continued to cooperate with U.S. authorities. CEO Paolo Ardoino said Tether had consistently shown that USDT was not a haven for sanctioned actors, terrorist organizations or criminal networks. Tether can freeze USDT held at specific addresses, unlike Bitcoin. This capability gives authorities a way to immobilize funds once wallets are identified. Traders on Polymarket currently give USDT a 59% chance of reaching a market capitalization of $200 billion by Dec. 31. The market has attracted about $190,000 in trading volume. TRM Labs data cited by The Wall Street Journal put USDT's share of on-chain volume across Iran-attributed wallets at 14% in August. The same data put the share at 67% in 2025. The decline followed Tether's April freeze of $344 million across two addresses linked to Iran's central bank.