Tether dominates wallets linked to Iran
Investigators examined 846 wallets sanctioned or targeted for seizure because of their alleged links to Iran and several organizations backed by Tehran. In this sample, 84% reportedly used USDT exclusively or almost exclusively. The report says these channels were used in particular to move funds across borders and circumvent restrictions imposed on Iran’s banking system.
The case is connected to an issue already visible in the tightening of international crypto sanctions followed by BrefCrypto. Dollar-pegged stablecoins enable international settlements to be made quickly without directly going through a US correspondent bank.
The subcommittee’s report also attributes some of these flows to networks linked to Iran’s central bank and organizations designated by the United States. It also refers to transactions associated with the trade in drones and other military equipment. These are the subcommittee investigators’ conclusions, not a court decision establishing Tether’s liability.
Democratic Senator Richard Blumenthal, the investigation’s main political author, forwarded the case to the Treasury Department and the Justice Department and asked them to examine possible violations of US sanctions and anti-money-laundering rules.
Tether responds with $550 million frozen
Tether counters the accusation with an equally significant figure: nearly $550 million in USDT linked to Iran was reportedly frozen with the help of US authorities in 2026.
Paolo Ardoino says USDT is not a safe haven for sanctioned entities or criminal networks and emphasizes that transactions are visible on public blockchains. Reuters reports that the company says it intends to continue cooperating with the US government.
This is an often-overlooked feature of Tether. USDT circulates freely between wallets, particularly on Tron, but its issuer retains the technical ability to blacklist certain addresses and prevent their tokens from moving. BrefCrypto recently detailed USDT’s control architecture on Tron, where approximately $91 billion depended on a two-of-three multisignature administrative mechanism.
This centralization therefore creates an almost paradoxical situation. USDT makes it possible to move digital dollars without a traditional bank, which is clearly of interest to sanctioned economies. At the same time, Tether can block tokens when addresses are identified.
The debate therefore concerns the speed of the response. The Democratic report notably criticizes Tether for not systematically freezing certain sanctioned addresses before 2024 and argues that wallets that are manifestly illicit sometimes remain usable before being blocked. Tether, by contrast, maintains that its tracing and freezing capabilities make it easier for authorities to act.
USDT becomes a geopolitical issue
The case now extends beyond Tether.
A dollar stablecoin allows an Iranian company, an individual or potentially a sanctioned entity to access a digital form of the greenback without directly holding a US bank account. It is precisely this efficiency that has made USDT a major infrastructure layer in the global crypto market.
And this infrastructure is now caught up in sanctions.
The US Treasury stepped up its action against financial networks linked to Iran in 2026, including their crypto transactions. Reuters notes that this campaign intensified further after the start of US military operations against Iran.
The case also adds an American political dimension. Blumenthal criticizes the oversight exercised by the Trump administration and highlights the historical financial ties between Tether and Cantor Fitzgerald. According to his office, Cantor holds 5% of Tether and retains a significant portion of its reserves. These are arguments put forward by the senator in his call for a federal investigation; they do not in themselves constitute proof of political intervention in Tether’s favor.
For the crypto industry, the issue is broader still. BrefCrypto had already pointed out that Tether’s dominance is gradually turning a private stablecoin into monetary infrastructure with global reach.
The Senate report illustrates precisely this shift. USDT is liquid and accessible enough to attract ordinary users, businesses, sanctioned states and the authorities monitoring them.
This is no longer just a stablecoin story. It is now a story about financial power.
