The Iran has used digital dollars issued by Tether to circumvent US sanctions, move funds through the global financial system and provide “significant financial lifeline” for regime’s shadow banking network., according to a report released Monday by Senate Democrats.
Tether, one of the most popular cryptocurrencies, issues the dollar-pegged stablecoin USDT.
Investigators analysed 846 crypto wallets sanctioned or targeted for seizure over links to Iran and regional proxies, finding that 84% transacted exclusively or nearly exclusively in USDT.
Senator Richard Blumenthal, the subcommittee’s top Democrat, said the findings show Tether is central to Iran’s ability to move funds, support its currency and procure drones and other military equipment.
The report raises concerns about Tether’s role in enabling illicit financial flows despite US sanctions.
The report criticised Tether for failing to consistently freeze illicit wallets, particularly before 2024.
In a statement Monday, Tether said actions involving USDT had resulted in about $550 million frozen in 2026 in wallets US authorities identified as connected to Iran’s central bank and sanctions networks, and that it is cooperating with US and international law enforcement.
The report, produced by the Senate Permanent Subcommittee on Investigations, says Tether’s stablecoin has become a major payment tool for the Iranian regime and has helped facilitate financing for terrorist proxy groups, including Hezbollah.
The findings, cited by The Wall Street Journal, highlight how cryptocurrency can provide sanctioned entities with an alternative to traditional banking channels.
