The Senate Permanent Subcommittee on Investigations has released a report concluding that Tether's dollar token has become central to Iran's sanctions-evasion networks, and its ranking member has asked the Treasury and Justice Departments to investigate the company's compliance.
Senator Richard Blumenthal made the PSI findings public on Monday, September 28, per Cryptopolitan and Coingape. "Tether and its flagship token have become central to Iran's shadow banking system," Blumenthal said in the release.
What the Investigation Found
Investigators analyzed 846 wallet accounts that had been sanctioned or flagged for seizure over Iran ties. Eighty-four percent of them transacted exclusively or almost exclusively in USDT.
Blumenthal referred the findings to Treasury Secretary Scott Bessent and Attorney General Todd Blanche for possible violations of sanctions law and the Bank Secrecy Act. The report also highlights Cantor Fitzgerald's roughly 5% stake in Tether and its connection to Commerce Secretary Howard Lutnick's family.
Tether's Response
Tether responded that it has supported the freezing of approximately $550 million in Iran-linked USDT during 2026, including funds tied to Iran's central bank and sanctioned entities. The company cited assistance in roughly $23 million in freezes connected to the sanctioned Russian exchange Garantex, and says it works with more than 340 law enforcement agencies across 67 countries.
"USD₮ is not a haven for sanctioned actors, terrorist organizations or criminal networks," CEO Paolo Ardoino said in the statement, pointing to Tether's repeated role in US enforcement operations alongside the DOJ, FBI, Secret Service, Homeland Security Investigations and OFAC.
A Campaign Climbing the Stack
The Senate referral is the political layer of a sanctions campaign that has run through enforcement all year: OFAC designated Nobitex in June, Shelbit Exchange and Aban Tether in August, and Xinbi this month, while prosecutors froze accounts tied to a stablecoin operation last week. Bloomberg reported on September 22 that the DOJ is separately examining whether Binance violated US sanctions on Iran — an inquiry Binance has not confirmed in detail.
The PSI report's significance for the market is less about any single wallet than about where responsibility is now expected to sit. A stablecoin issuer that claims proactive freezing has frozen hundreds of millions; a Senate subcommittee says the same token still carried 84% of the Iran-linked wallet activity it examined. Both can be true, and that gap — between reactive freezecraft and the exposure created before funds are frozen — is what Treasury and DOJ have now been asked to measure.
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