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US Senate Democrats Investigate Tether's USDT for Potential Iran Sanctions Evasion
Senate Democrats have released a report indicating that Tether's USDT cryptocurrency is a significant tool in Iran's efforts to evade international sanctions. The report, titled 'Tethered to Terrorism: Crypto & Iran’s Shadow Banking Network,' was published on September 28, 2026, by the minority staff of the Senate Permanent Subcommittee on Investigations. It highlights that 84% of the sanctioned crypto wallets linked to Iran primarily transacted in USDT, raising concerns about the cryptocurrency's role in facilitating financial transactions for Iranian proxies such as Hezbollah and Hamas.
The report analyzed 846 crypto wallets that had been sanctioned or targeted for seizure by the U.S. Treasury's Office of Foreign Assets Control (OFAC) and Israel's National Bureau for Counter Terror Financing between June 2021 and August 2026. Notably, 87% of the wallets flagged by Israel were found to have transacted mainly in USDT, while 57% of those designated by OFAC also showed a similar trend. One particular case cited involved a network of sanctioned oil smugglers that moved over $603 million in USDT during the reporting period.
In response to the findings, Tether stated that it had frozen approximately $550 million in USDT associated with Iran throughout 2026, including $344 million linked to the Central Bank of Iran. However, the report criticized Tether for inconsistencies in its enforcement of wallet freezes prior to 2024, suggesting that the company's compliance with sanctions and anti-money laundering regulations was uneven in earlier years.
Senator Richard Blumenthal of Connecticut, who is leading the subcommittee's investigation, has referred the report's findings to the Treasury Department and the Justice Department for further inquiry. The agencies have been asked to respond by October 9, 2026, regarding Tether's adherence to U.S. sanctions and anti-money laundering laws. While the report does not carry the weight of a full committee finding, it signals a growing scrutiny of cryptocurrency's role in international finance.
Source: KLEA News