Senate Report Alleges Tether's USDT Fuels Iran's Shadow Banking
A Senate Democratic report says Tether's USDT stablecoin has become a key financial lifeline for Iran and its proxies, prompting calls for a Treasury and Justice Department investigation.
A report led by Senate Democrats has concluded that Tether's USDT stablecoin has become a "significant financial lifeline" for Iran and a means of funding proxy organizations, including Hezbollah.
The investigation, headed by Senator Richard Blumenthal of Connecticut, the top Democrat on the Senate Permanent Subcommittee on Investigations, examined 846 cryptocurrency wallets sanctioned by Israel and the United States over their ties to Iran. It found that 84% of them conducted transactions in USDT.
According to the findings, the token has been used to help the Iranian government move money across its borders and to shore up its currency in the face of US sanctions, including through the Central Bank of Iran.
Blumenthal said the report "exposes how Tether and its flagship token have become central to Iran's shadow banking system," enabling the government to finance a range of activities. He urged the Treasury and Justice Departments to open an investigation into Tether.
USDT is the world's largest dollar-backed stablecoin. In response, Tether said it was committed to cooperating with the US government and pointed to its support for the freezing of nearly $550 million in Iran-linked USDT in 2026.
"Tether has consistently demonstrated that USD₮ is not a haven for sanctioned actors, terrorist organizations or criminal networks," CEO Paolo Ardoino said in a statement.
The report comes as Washington has tightened its economic pressure on Tehran. After the start of the US military campaign against Iran this year, the Treasury Department expanded its sanctions on the Islamic Republic, launching Operation Economic Outcast last month, which includes a focus on crypto transactions.