A Senate investigation reveals that Tether’s USDT stablecoin is a primary tool for the Iranian regime to bypass U.S. sanctions, according to a report by the Permanent Subcommittee on Investigations. The report analyzed 846 sanctioned wallets tied to Iran and found that 84% transacted exclusively or nearly exclusively in USDT. Tether, which issues USDT representing about 60% of all stablecoins by market cap, is accused of enabling Iran to fund terrorist proxies like Hezbollah, support drone and missile programs, and conduct illicit oil sales. The report criticizes Tether for not freezing sanctioned wallets quickly enough, despite its ability to freeze and re-mint USDT. Evidence includes leaked documents showing the Central Bank of Iran purchasing tens of millions in USDT and links to a $1.5 billion Bybit hack attributed to North Korea. Transactions in USDT by Iran-linked wallets dropped from 72% in 2024 to 67% in 2025, and to 14% in August per TRM Labs, suggesting possible reconsideration. Tether has worked with law enforcement to freeze some wallets but did not comment on the report. The findings were referred to Justice and Treasury Departments for further action.

Key entities include Tether, USDT, the Permanent Subcommittee on Investigations, Sen. Richard Blumenthal (D., Conn.), the U.S. Treasury Department, the Justice Department, the Central Bank of Iran, Hezbollah, Bybit, North Korea, and TRM Labs. Locations referenced are Iran, the U.S., Israel, and China.