US authorities are intensifying their investigation into claims that Iran uses cryptocurrency networks to bypass sanctions, with stablecoin issuer Tether now at the center of the probe. On September 28, Senator Richard Blumenthal from the Senate Permanent Subcommittee on Investigations (PSI) urged the Treasury and Justice Department to expand their scrutiny of Tether, highlighting concerns about financial networks supporting Iran.
Senate calls for deeper inquiry into Tether
Senator Blumenthal publicized the PSI’s recent findings in Washington, D.C., revealing that US investigators reviewed 846 cryptocurrency wallets flagged for connections to Iran. According to the investigators, 84% of these wallets were used exclusively or almost exclusively for transactions in USDT, Tether’s dollar-pegged stablecoin.
Blumenthal described Tether and its main token as “central to Iran’s shadow banking system” and referred the findings to Treasury Secretary Scott Bessent and Attorney General Todd Blanche, citing potential violations of US sanctions and the Bank Secrecy Act. He also drew attention to financial firm Cantor Fitzgerald’s 5% stake in Tether, noting its link to Commerce Secretary Howard Lutnick’s family.
“Tether and its flagship token have become central to Iran’s shadow banking system,” wrote Senator Blumenthal in the release detailing the subcommittee’s PSI findings.
Tether Limited, the company that issues USDT, responded the following day. The company stated that it had worked with law enforcement to freeze nearly $550 million in USDT tied to Iran’s central bank and other sanctioned entities in 2026.
CEO Paolo Ardoino asserted that “USD₮ is not a haven for sanctioned actors” and emphasized the company’s ongoing collaboration with US authorities.
Tether stated it cooperates with over 340 law enforcement agencies across 67 countries as part of its compliance efforts.
Mini dictionary: Tether Limited is a fintech company best known for issuing USDT, a stablecoin designed to maintain a 1:1 value with the US dollar. The company operates internationally and provides digital assets facilitating quick, large-value transfers across borders.
US enforces new measures against Iran’s crypto activity
The Tether case forms part of a broader campaign against Iran’s use of digital assets. On August 24, the Treasury rolled out Operation Economic Outcast, targeting almost 60 entities linked to Iran and designating digital assets as one of five sectors vulnerable to sanctions.
According to blockchain intelligence firm TRM Labs, the move could increase the likelihood of secondary sanctions against exchanges, OTC brokers, payment processors, and other entities suspected of supporting Iranian crypto operations.
Federal prosecutors have also filed a civil forfeiture case to reclaim $61 million in cryptocurrencies believed to originate from Iranian black market oil sales. Prosecutors disclosed that wallets connected to these cases processed about $1.5 billion affiliated with illicit activity.
Blockchain analytics firm Chainalysis reported that digital wallets associated with Iran’s Revolutionary Guard Corps have received more than $3 billion through 2025.
| Entity/Action | Amount (USD) | Year/Period |
|---|---|---|
| Tether-frozen USDT linked to Iran | $550 million | 2026 |
| Funds processed by black market wallets | $1.5 billion | Up to 2026 |
| Cryptos seized in forfeiture case | $61 million | 2026 |
| Funds to IRGC-linked wallets | $3 billion | Through 2025 |
Crypto industry faces rising US scrutiny
US authorities are now treating stablecoins, cryptocurrency exchanges, wallets, and oil-focused crypto networks as interrelated components of a single sanctions environment. Law enforcement attention has recently expanded to major cryptocurrency trading platforms; for instance, officials are reportedly assessing whether Binance allowed Iran-related trades on its exchange.
Amid this climate, global crypto firms are facing pressure to implement more stringent checks on customers and partners—and to prepare for the risk of secondary sanctions if found facilitating transactions with sanctioned countries. The final outcome may depend on how the Treasury and Justice Department pursue the Senate’s referral and whether further compliance measures are triggered across the industry.
