U.S. Senate Democrats Say Tether Was Used to Evade Iran Sanctions, Urge Review of AML Obligations
Summary
- A U.S. Senate investigation raised allegations that Tether (USDT) was widely used to help Iran evade sanctions and finance terrorism.
- The report said an analysis of Iranian sanctioned and blocked wallets showed USDT played a central role in Iran’s informal financial networks and fundraising activity, and that Tether repeatedly failed to freeze wallets linked to illicit finance.
- Senator Blumenthal raised the possibility that Tether violated sanctions and banking laws and called for a review of oversight of its anti-money-laundering obligations. Tether pushed back by highlighting Iran-linked USDT freezes and the transparency of public blockchains, while saying no legal violation has been established.
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A U.S. Senate investigation has raised allegations that Tether’s USDT was widely used to help Iran evade sanctions and finance terrorism.
The Block reported on September 28 that Democratic staff on the Senate Permanent Subcommittee on Investigations, led by Senator Richard Blumenthal, released a 28-page report analyzing 846 crypto wallets tied to Iran that had been sanctioned or blocked. The report said Tether’s USDT played a central role in Iran’s informal financial networks and fundraising activity.
According to the investigative team, 87% of 757 wallets classified as being involved in Iran’s terrorist financing primarily transacted in USDT. The team cited USDT’s widespread use on Iranian crypto exchanges and its deeper liquidity than other stablecoins.
The report said Tether repeatedly failed to freeze wallets linked to illicit financial activity. It also alleged that the company failed to take appropriate action even when public information showed ties to Iran-linked entities or terrorist groups. Blumenthal sent a letter to Deputy Attorney General Todd Blanche and Treasury Secretary Scott Bessent urging them to investigate whether Tether may have violated sanctions and banking laws.
Tether’s personnel and business ties to the Trump administration were also part of the review. The report noted that Howard Lutnick, the former chief executive officer of Cantor Fitzgerald, which handles Tether’s custody business, is now commerce secretary. It also said Bo Hines, the former executive director of the White House crypto council, is now chief executive officer of Tether’s U.S. entity. Blumenthal argued that those ties warranted a review of whether oversight of Tether’s anti-money-laundering obligations had been sufficient.
Tether pushed back in a statement the same day, saying it had supported the freezing of about $550 million in Iran-linked USDT over the past year. Chief Executive Officer Paolo Ardoino said USDT was not a safe tool for sanctioned actors or terrorist groups to hide funds and said public blockchains made it easier to trace the movement of money than cash.
The report contains allegations raised by Democratic investigators in the Senate and does not establish that Tether violated the law. Still, it points to the possibility of broader congressional scrutiny of Iran’s use of crypto and stablecoin issuers’ obligations to comply with sanctions.
