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Key Takeaways
- A minority-party Senate subcommittee report alleges USDT is a lifeline for Iran’s shadow banking network and that Tether’s wallet freezes are slow and inconsistent.
- Tether says it has supported nearly $550 million in Iran-linked freezes and coordinates regularly with authorities.
- The report is a political document, not a finding of the full committee, and Tether has not been charged.
Democrats on a U.S. Senate intelligence subcommittee published a report Monday alleging that Tether’s USDT stablecoin has become a key tool for the Iranian government to move funds around international sanctions. Tether responded the same day, saying it has supported nearly $550 million in Iran-linked freezes at the request of U.S. authorities.
Report Alleges USDT Is Central to Iran’s Shadow Banking
The report was published by Democrats on the Permanent Subcommittee on Intelligence, part of the Senate Homeland Security and Governmental Affairs Committee. Sen. Richard Blumenthal is the subcommittee’s lead Democrat.
The document, titled “Crypto and Iran’s Shadow Banking Network,” was issued by the minority members and does not represent a finding of the full committee.
The report states that Iran’s crypto-based shadow banking network has processed significant volumes of funds and implicates various Iranian interests. It describes USDT’s role in stark terms.
“USDT has become a significant financial lifeline within Iran’s shadow banking network.”
The report did not give an overall figure for how much USDT the Iranian government has transacted. It estimated that the government made about $2 billion in transactions last year.
Report Faults Tether’s Freeze Practices
The authors allege that Tether has repeatedly failed to block wallets connected to Iran. When Tether does freeze wallets, the report says, the process sometimes takes weeks. It also claims the company at times responds to requests from authorities without actually blacklisting the wallets in question.
The report also addresses Tether’s conduct before 2024. It states that the company did not comprehensively and consistently freeze wallets designated by counter-terrorism agencies during that period and continues to fall short on proactively blocking clearly illicit wallets.
According to the report, that absence of deterrence invited abuse, and it says terrorist groups such as Hamas moved from Bitcoin and a mix of other cryptocurrencies toward promoting USDT.
Tether can blacklist addresses on its tokens, a control that lets it stop designated wallets from moving funds. The report’s allegations concern how quickly and completely the company has used that ability.
Issuer-level freezes have been used in other recent cases. In the breach of crypto exchange Bitget last week, Circle and Tether froze about $320,000 in stablecoins connected to the attack.
The Iran report does not address that case. It focuses on the timing and consistency of freezes tied to designated wallets and sanctions programs, which the authors say have not matched the scale of the activity they describe.
Criticism Extends to Crypto Broadly
The report frames Iran’s use of USDT as part of a wider problem. It says cryptocurrencies are actively undermining efforts by the United States and its allies to prevent what it calls the Islamic Republic’s regional terrorism.
That framing places the findings within a broader argument about the sanctions risks posed by digital assets, beyond Tether specifically.
Tether Points to Nearly $550 Million in Freezes
Tether published a blog post Monday listing recent freezes it said it carried out at the request of U.S. authorities. The company said it has supported nearly $550 million in Iran-linked freezes as U.S. sanctions efforts expand. Tether CEO Paolo Ardoino said in the post that the company works closely with law enforcement.
“We remain in regular and direct coordination with authorities.”
Ardoino added that the company aims to help ensure illicit funds can be identified and frozen as governments step up efforts against sanctions evasion and terrorist financing.
Allegations Are Not Findings of Wrongdoing
The report is a political document from one party’s members of the subcommittee, and its claims have not been tested in a legal proceeding. Tether has not been charged in connection with the allegations described. The Tether figures on freezes come from the company’s own statement and were not independently verified for this article.
The two sides also describe different things. The report addresses how fast and how completely Tether acted on wallets linked to Iran and to designated groups. Tether’s statement addresses the total value of funds it says it has frozen.
The two claims are not directly comparable, since a large frozen total can coexist with delays on individual wallets. Neither document, as described, establishes the share of Iran-related USDT activity that went unfrozen.
