Senator Blumenthal Investigates Tether's Links to Sanctioned Entities and Cantor Fitzgerald

Democratic Senator Richard Blumenthal has initiated an investigation into Tether's USDT stablecoin, highlighting its connections to wallets linked to Iran and sanctioned entities. A staff report released on September 28, 2026, titled "Tethered to Terrorism," reveals that 84% of 846 wallets reviewed, which were designated by the US Treasury's Office of Foreign Assets Control (OFAC) and Israel's National Bureau for Counter Terror Financing, heavily utilized USDT. Notably, 87% of the wallets flagged by Israel and 57% of those designated by OFAC were found to rely on Tether's token, raising concerns about its role in facilitating transactions for Iranian oil smugglers associated with terrorist groups.

The report also scrutinizes Cantor Fitzgerald, which holds a 5% equity stake in Tether and manages a significant portion of its reserves, estimated to exceed $100 billion. Blumenthal has expressed concerns regarding potential conflicts of interest, questioning whether a firm with both ownership and custodial responsibilities can adequately oversee Tether's operations. He has formally requested inquiries from Treasury Secretary Scott Bessent and Attorney General Todd Blanche, focusing on Tether's compliance with sanctions and anti-money laundering regulations.

In response to the allegations, Tether has stated that it cooperates with law enforcement and claims to have frozen approximately $550 million in USDT linked to Iranian entities during 2026. However, critics argue that this figure is overshadowed by the $603 million moved by the identified smugglers, suggesting that Tether's enforcement measures may be more reactive than proactive. The ongoing scrutiny could impact USDT's liquidity and adoption among institutional investors, particularly if regulators implement stricter operational rules for stablecoins in light of these findings.

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Source: KLEA News