WASHINGTON — A Senate Democratic report alleges Tether's USDT stablecoin serves as a primary tool for the Iranian government to bypass international sanctions. The document, published Monday by the Senate Homeland Security and Governmental Affairs Committee's Permanent Subcommittee on Investigations, identifies USDT as a key component of Iran's shadow banking network.
The report claims the Iranian government conducted an estimated $2 billion in transactions using USDT last year. It said USDT has become an important financial channel within Iran's illicit financial system, enabling the Islamic Republic's regional terrorism efforts.
Investigators analyzed 846 sanctioned crypto addresses over more than five years to compile their findings. The report said Tether has repeatedly failed to block wallets connected to Iran and neglects proactive freezing of illicit accounts.
The document details Tether's alleged inconsistency in enforcement, saying that while the company sometimes freezes wallets, it can take weeks. In other instances, Tether reportedly responds to requests without blacklisting the wallets in question.
Prior to 2024, Tether did not consistently freeze wallets designated by counter-terrorism agencies, according to the report. This lack of deterrence invited abuse, with terrorist organizations like Hamas shifting from Bitcoin and other cryptocurrencies to promoting USDT.
Tether responded to the report in a blog post Monday, saying it has supported nearly $550 million in Iran-linked freezes. The company listed several recent actions it took at the behest of U.S. authorities.
Paolo Ardoino, Tether's CEO, said in the post that the company remains in regular and direct coordination with U.S. and international authorities. This coordination aims to identify and freeze illicit funds as governments intensify efforts against sanctions evasion and terrorist financing.
Senator Richard Blumenthal led the 28-page report, which casts Iran's reliance on USDT as an indictment of cryptocurrencies. It suggests digital assets are actively undermining attempts by the United States and its allies to curb the Islamic Republic's activities.
The investigation's findings show persistent challenges in tracing and enforcing sanctions within decentralized finance. The report points to the ongoing tension between on-chain transparency and the operational complexities of global compliance for stablecoin issuers.
