Senate Democrats say Tether is a lifeline for Iran sanctions evasion
A new Senate report alleges Tether's USDT helps Iran bypass sanctions and that the issuer has repeatedly failed to block Iran-linked wallets, claims Tether disputes.
Key points
- Democrats on the Senate Permanent Subcommittee on Intelligence published the report on Monday.
- The report says USDT has become a significant financial lifeline within Iran's shadow banking network.
- It claims Tether sometimes took weeks to freeze wallets and sometimes did not blacklist them at all.
- The report says Iran's government made an estimated $2 billion in transactions last year.
- Tether said it has supported nearly $550 million in Iran-linked freezes and coordinates with US authorities.
Tether has become a lifeline for Iran's sanctions evasion, according to a new report from Senate Democrats, who say the stablecoin issuer has repeatedly failed to block Iran-connected wallets. The report was published on Monday by Democrats on the Senate Homeland Security and Governmental Affairs Committee's Permanent Subcommittee on Intelligence, and was first reported by the Wall Street Journal.
The document argues that USDT, the dollar-pegged stablecoin, plays a central role in allowing Iran to conduct transactions that skirt international sanctions. It says Iran's cryptocurrency-based shadow banking network has processed significant volumes of funds and implicates various Iranian interests, and that USDT has become a significant financial lifeline within that network.
The report criticises Tether's record on freezing wallets. It says that when the company does act, it sometimes takes weeks, and that it sometimes responds to requests without actually blacklisting the wallets in question. Before 2024, the report claims, Tether did not comprehensively and consistently freeze wallets designated by counter-terrorism agencies, and it continues to fail to proactively block clearly illicit wallets.
Senate report alleges evasion
According to the report, that absence of deterrence invited abuse, with terrorist organisations such as Hamas shifting from Bitcoin and a mix of cryptocurrencies to promoting USDT. The report did not give an overall total for how much USDT it alleged the Iranian government transacted with, but said the government made an estimated $2 billion in transactions last year.
The report frames Iran's use of USDT as a broader indictment of crypto, saying cryptocurrencies are actively undermining attempts by the United States and its allies to prevent the Islamic Republic's regional terrorism.
Tether pushed back in a blog post on Monday, saying it had supported nearly $550 million in Iran-linked freezes and listing recent actions it said it took at the behest of U.S. authorities. CEO Paolo Ardoino said the company remains in regular and direct coordination with authorities in the United States and around the world to help ensure illicit funds can be identified and frozen.
Freezes criticised as slow
The allegations add to scrutiny of the world's largest stablecoin and of how easily dollar-pegged tokens can be used to move value outside the banking system. For policymakers weighing stablecoin rules, the report is a case study in the sanctions risks that issuers are expected to police.