Senate report says Tether's USDT is central to Iran's shadow banking

A Senate investigation led by Sen. Richard Blumenthal says Tether and its USDT stablecoin are central to Iran's shadow banking and the financing activities of terrorist groups. The report says 87% of 757 wallets implicated in Iranian terrorism financing predominantly transacted in USDT. Democratic investigators analyzed blockchain transaction data from 846 crypto wallets sanctioned or otherwise blocked because of their association with Iran. Investigators said Iranian crypto exchanges widely use USDT. They also cited the stablecoin's relative liquidity compared with alternatives as a reason for its use. Investigators said Tether repeatedly failed to freeze and block wallets. They said Tether also failed to act on wallets with strong indicators of illicit finance, despite ample public information about ties to Iranian entities or terrorist organizations. Blumenthal urged Attorney General Todd Blanche and Treasury Secretary Scott Bessent to investigate potential sanctions and banking law violations. The report and Blumenthal highlighted Tether's connections to the Trump administration, including through Commerce Secretary Howard Lutnick. Before joining the administration, Lutnick led Cantor Fitzgerald, which acts as a custodian for Tether. Lutnick's sons have since taken over leadership at the firm. Bo Hines, the previous executive director of the White House Crypto Council, is now CEO of Tether U.S. Blumenthal said Tether's U.S. connections raised concerns that foreign adversaries could put national security at risk. He also said Tether's continued use by Iran raised questions about whether the company received lax enforcement and lenient oversight of its anti-money-laundering obligations. Tether said in a post that it had helped freeze $550 million in USDT linked to Iran over the past year. Tether CEO Paolo Ardoino said USDT is not a haven for sanctioned actors, terrorist organizations or criminal networks. Ardoino said public blockchains give authorities visibility into fund movements that cash does not provide. He said Tether can act when law enforcement provides credible information.