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Tether’s USDT stablecoin has become an important tool in Iran’s alleged sanctions-evasion network, according to a new report from Democratic staff on the U.S. Senate Permanent Subcommittee on Investigations.
The report argues that Iran has increasingly relied on cryptocurrency-based financial networks to move funds outside the traditional banking system. It specifically identifies USDT, the dollar-pegged stablecoin issued by Tether, as a significant part of what investigators describe as Iran’s “shadow banking” infrastructure.
According to the report, Tether has not consistently blocked wallets linked to Iranian entities and, in some cases, allegedly took weeks to freeze identified addresses. The Democratic staff also claimed that before 2024, Tether did not consistently freeze wallets designated by counterterrorism authorities.
The report did not provide a comprehensive estimate of all USDT transactions involving Iran. However, it estimated that the Iranian government conducted about $2 billion in cryptocurrency transactions last year.
The findings form part of a broader Senate inquiry into cryptocurrency's potential use for sanctions evasion, money laundering and terrorist financing. Earlier in 2026, the subcommittee sought information from Binance concerning transactions involving Iranian entities and the use of Tether in potential sanctions-evasion activity.
Tether pushed back against the criticism, highlighting its cooperation with U.S. and international authorities. The company said Monday that it has helped freeze nearly $550 million in Iran-linked funds and remains in direct contact with law enforcement agencies investigating illicit cryptocurrency activity.
Tether has previously publicized major enforcement actions involving USDT. In April, the company said it assisted U.S. authorities in freezing more than $344 million across two addresses and noted that it works with over 340 law enforcement agencies in 65 countries.
CEO Paolo Ardoino said Tether continues to coordinate with authorities to identify and freeze funds associated with sanctions evasion and terrorist financing, highlighting the competing claims over USDT’s role in illicit finance and enforcement.
