WASHINGTON (Reuters) - Tether's USDT stablecoin has become a significant financial lifeline for Iran and a tool for funding proxy organizations, including Hezbollah, according to a report led by Senate Democrats published on Monday.
Led by Senator Richard Blumenthal of Connecticut, the Senate Permanent Subcommittee on Investigations analyzed 846 cryptocurrency wallets sanctioned by Israel and the United States in connection with Iran.
The report found that 84% of the wallets had transacted in USDT, including transactions allegedly used to help the Iranian government move money across borders and support its currency amid US sanctions, including through the Central Bank of Iran.
Blumenthal said the report showed how Tether and its flagship token had become central to what he described as Iran's shadow banking system and called on the US Treasury and Justice departments to investigate Tether.
Tether, the world's largest dollar-backed stablecoin, said it was committed to cooperating with the US government and had supported the freezing of nearly $550 million in Iran-linked USDT during 2026.
Tether CEO Paolo Ardoino said the company had consistently demonstrated that USDT was not a haven for sanctioned actors, terrorist organizations or criminal networks.
The US Treasury has intensified sanctions against Iran following the start of the US military campaign against the country this year, with a recent sanctions operation also focusing on cryptocurrency transactions.