84% of US-sanctioned Iranian wallets transacted in USDT, investigators say
The forthcoming report from the Permanent Subcommittee on Investigations states that Tether’s USDT stablecoin has become “a primary means of payment for the Iranian regime” and a tool for funding groups such as Hezbollah. Tether, the issuer of USDT, accounts for roughly 60% of all stablecoins by market capitalization; stablecoins are digital tokens pegged to fiat currencies—in USDT’s case, the U.S. dollar—which gives them lower volatility than other cryptocurrencies and makes them more usable as a medium of exchange.
The report lands as the Treasury Department has intensified its economic campaign against Iran following U.S. military strikes against the country earlier this year. Among the steps Treasury has taken is an initiative in August called Operation Economic Outcast, which seeks to further isolate Iran financially.
Blumenthal’s analysis examined 846 wallets—the accounts cryptocurrency users open to conduct transactions—that have been sanctioned by the U.S. and Israeli governments in connection with Iran. Of those, 84% transacted exclusively or near exclusively in USDT, according to a copy viewed by The Wall Street Journal.
“The report exposes how Tether and its flagship token have become central to Iran’s shadow banking system, allowing the Iranian government to fund its regional proxies, commit human-rights abuses, and pursue hostile drone and missile programs as they defy our sanctions regime,” Blumenthal told the Journal.
The subcommittee on Monday referred its report to officials at the Justice and Treasury Departments, according to letters viewed by the Journal. A Tether spokesman did not return requests for comment. The company has previously worked with law enforcement to freeze some wallets tied to Iran.
Tether’s use by sanctions evaders, drug traffickers and other criminal organizations has been detailed in reporting by the Wall Street Journal.
The report details specific instances in which wallets attributed to Iranian entities transacted in USDT. In one case, documents leaked online appeared to show an Iranian company brokering the purchase of tens of millions of dollars’ worth of USDT by the Central Bank of Iran, the Journal reported earlier this year.
Subsequent analysis of public blockchain data linked some of that USDT to a $1.5 billion hack of crypto exchange Bybit attributed to North Korea. The Senate report, citing an Iranian media account, said the purchase of the stolen crypto was part of an effort by Iran to support the rial and continue selling oil to allies including China.
Tether has the technical ability to freeze and “re-mint” USDT—removing it from one wallet and re-creating it in another. The Senate report criticizes the company for failing to promptly freeze USDT in wallets already sanctioned by the U.S. and Israel.
Some evidence suggests Iran may be rethinking its reliance on the token. Transactions in USDT across wallets attributed to Iran by blockchain-analytics firm TRM Labs fell from 72% in 2024 to 67% in 2025; in August, USDT represented 14% of on-chain volume for those wallets.
Even so, Tether remained a common thread in many of the wallets most recently sanctioned by U.S. authorities, Senate investigators said. Those include wallets linked to the Central Bank of Iran in July and others used by a network that allegedly helped facilitate Iranian oil sales.