Senator Richard Blumenthal released a staff report on September 28, 2026, alleging that Tether's USDT serves as a payment rail for sanctioned entities linked to Iran. The report analyzed 846 wallets flagged by the US Treasury's OFAC and Israel's National Bureau for Counter Terror Financing between June 2021 and August 2026, finding that 84% of these addresses utilized USDT.
The analysis highlights that 87% of Israeli-flagged wallets and 57% of OFAC-designated wallets used the stablecoin. Specifically, two sanctioned Iranian oil smugglers reportedly moved over $603 million in USDT through networks associated with Hezbollah and Houthi factions. Tether stated it cooperated with law enforcement to freeze approximately $550 million in Iran-affiliated assets during 2026.
Blumenthal is questioning the relationship between Tether and Cantor Fitzgerald, which holds a 5% equity stake in the issuer and manages reserves estimated at over $100 billion. The senator raised concerns regarding potential self-dealing, as the firm acts as both a shareholder and a custodian for Tether's reserves.
The senator has formally requested that Treasury Secretary Scott Bessent and Attorney General Todd Blanche initiate inquiries into Tether's sanctions compliance and anti-money laundering practices. While no formal investigations have been announced, the report suggests that increased scrutiny could impact USDT liquidity and lead to stricter regulatory requirements for stablecoin issuers.
