Sen. Richard Blumenthal has asked the U.S. Treasury Department and the Department of Justice to investigate Tether over its anti-money laundering and sanctions compliance, after Senate investigators said Iran and its regional proxies have relied on USDT more than any other cryptocurrency to move money around sanctions.
The request follows a report released Monday by Democratic staff of the Senate Permanent Subcommittee on Investigations. The staff work for Blumenthal, the ranking member from Connecticut. Their report said Tether’s USDT has been the primary crypto asset used in these flows.
Report reviewed 846 wallets tied to sanctioned networks
The staff analyzed transactions involving 846 wallets that the U.S. Treasury’s Office of Foreign Assets Control, or OFAC, and Israel’s counter-terror financing bureau have sanctioned or targeted for seizure over links to Iran, Hamas, Hezbollah, and the Houthis.
According to the report, 84% of those wallets transacted exclusively, or nearly exclusively, in USDT. The staff described the findings as preliminary.
Broken down by list, the share was 87% for the 757 wallets on Israel’s list and 57% for the 101 wallets on OFAC’s list. The report counted a wallet when more than 80% of its dollar volume was in USDT. Bitcoin ranked a distant second on both lists.
Letters ask Treasury and DOJ about prior inquiries
Blumenthal sent letters to Treasury Secretary Scott Bessent and Attorney General Todd Blanche, asking them to investigate Tether’s anti-money laundering and sanctions compliance. He also asked the subcommittee to be told by Oct. 9 whether either department had narrowed, paused, or closed any earlier inquiry into the company.
The letters cited reports that federal prosecutors in Manhattan opened a Tether investigation in October 2024 and that Treasury had weighed sanctioning the company. They also said Cantor Fitzgerald owns 5% of Tether and noted that Commerce Secretary Howard Lutnick ran the firm until recently, before his children took control.
Investigators point to delays in wallet freezes
As the issuer, Tether can blacklist a USDT wallet and stop its funds from moving. The report said Tether did not appear to freeze any wallets designated by Israel from 2021 through May 2023. It added that the company’s freezing actions since then have been uneven and inconsistent.
One example in the report involved 39 wallets designated by Israel in June 2023 as tied to Tawfiq Muhammad Sa id Al-Law, whom the report described as a Hezbollah money launderer. Tether froze only five of them at the time, according to the report. The other 34 were not frozen until March 2024, shortly before OFAC also sanctioned Al-Law.
Senate staff said more than $34.6 million in USDT left those wallets during that gap.
The report also criticized Tether for not acting on its own against wallets that were not named in any sanctions or seizure notice, including Central Bank of Iran wallets posted on X in December 2025 by sanctioned Iranian financier Babak Zanjani.
Tether confirmed receiving the subcommittee’s June request for documents but had not responded, the report said.
Tether says it has supported major freezes this year
Tether published a statement Monday morning saying freezes it supported this year have locked up about $550 million in Iran-linked USDT. The company also said it has frozen more than 22 million USDT across more than 640 addresses in cases referred by Israel’s counter-terror financing bureau.
The statement did not mention the Senate report. In the release, Tether CEO Paolo Ardoino said, 「Tether has consistently demonstrated that USD₮ is not a haven for sanctioned actors, terrorist organizations or criminal networks.」
The report arrived one month after Treasury named digital assets a sanctionable sector of Iran’s economy.