Senator Richard Blumenthal (D-CT) has set his sights on Tether’s USDT, with a report titled “Tethered to Terrorism,” making the case that the stablecoin has turned into a route for Iranian sanctions evasion. The data is striking: out of 846 sanctioned wallets linked to Iran and its proxies, 84% carried out transactions that were either solely or almost entirely in USDT. The period covered spans June 2021 through August 2026.
The Numbers Behind the Report
The analysis covers wallets designated by Treasury’s Office of Foreign Assets Control (OFAC) and Israel’s National Bureau for Counter Terror Financing. The breakdown shows 87% of 757 wallets designated by the Israeli bureau transacted predominantly in USDT. Only 57% of 101 wallets designated by OFAC showed similar behavior.
The two sanctioned Iranian oil smugglers, Alireza Derakhshan and Arash Estaki Alivand, moved over $603 million in USDT between 2021 and 2025. That network connected to Hizballah, the Houthis and Iranian financial institutions. There is evidence that the same network was used for buying and selling drones and other military equipment.
Tether did not “comprehensively and consistently freeze” wallets designated by counter-terrorism agencies before 2024. One instance saw $34.6 million keep moving through sanctioned wallets even after designation.
Who Owns Tether and Why That Matters
Tether describes its compliance with OFAC sanctions as “voluntary” and says it follows OFAC “guidelines.” Blumenthal has reason to dig deeper. Cantor Fitzgerald owns 5% of Tether and holds a large share of its assets. Cantor was run until recently by Commerce Secretary Howard Lutnick and is now controlled by his children.
According to Bloomberg reporting from March, Tether loaned money to the senator’s children so they could buy back their father’s stake when he sold it upon his nomination. The senator has since reached out to Treasury Secretary Scott Bessent and Attorney General Todd Blanche, requesting an investigation into the matter.
The Senator’s Words and the Company’s Response
Speaking to CNBC’s Squawk Box Tuesday, Blumenthal called USDT “a superhighway” for sanctions evasion. He said Treasury and the Justice Department enforcement had been “none, zero.”
Tether responded the same day with its own statement. It said it froze roughly $550 million across wallets linked to Iran’s central bank in 2026. More than $344 million was frozen in April; over $130 million in July. The total frozen across all cases: more than $4.9 billion, working with over 340 agencies in 67 countries.
“Public blockchains provide authorities with a level of visibility into the movement of funds that simply does not exist with cash”
Paolo Ardoino, who runs Tether, made that remark. It did not refer to the subcommittee or its conclusions.
What Comes Next for Crypto Regulation
FinCEN issued an alert in May describing Iran’s use of stablecoins. Treasury widened its campaign in August, gaining power to sanction any foreign person operating in Iran’s digital asset sector.
In June, subcommittees reached out to Tether for information. The company acknowledged receiving the correspondence, but had not responded by the time of publication.
It is plain to see. Actors given permission move through USDT, and the system allowed it for years. The lax oversight behind Tether’s response is freezing some funds after the fact, but the senator’ remains the cause of evasion.
The document identifies the wallets, the numbers, and the families standing behind the companies. Blumenthal wants an investigation, not a lesson. The real test is whether anyone responds.
| Event | Date |
|---|---|
| Report release | Not specified |
| Tether statement | Same day as Blumenthal’s CNBC appearance |
| FinCEN alert | May |
| Treasury power expansion | August |
| Subcommittees wrote to Tether | June |
| Freeze figures reported | Not specified |
The senator has put forward his position. The company has responded with its own figures. Now Treasury and the Justice Department hold the ball.
Where the paper stands
The paper backs the small business against both the agency and the giant and is against broad new rulebooks, so it takes no side here but notes the stakes for any firm caught up in sanctions enforcement. The paper’s position is that regulation usually protects the biggest players and raises the cost of entry for small ones, and it opposes rules that do that.
What matters here is not which side is right but how the game is being played. A company whose owners sit inside the very agencies enforcing sanctions is a strange position to be in, and the paper has no patience for arrangements that let big firms write their own rules while small ones pay the price. The paper would want the investigation to look closely at the ties between the parties involved, because a company that can freeze billions in response to a senator’s report but left subcommittees waiting is a company that may have gotten used to answering to some masters and not others.
The reader should watch for whether the Justice Department treats this as evasion or as a business dispute, and whether the senator’s children’s stake in Tether gets the same scrutiny as everyone else’s. The paper will be watching.
Source material: “US Senator Blumenthal Calls Tether's USDT a 'Superhighway' for Iranian Sanctions Evasion,” Decrypt.
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