By Chandni Shah
Sept 28 (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 top Democrat on the Senate Permanent Subcommittee on Investigations, the report analyzed 846 crypto wallets that have been sanctioned by Israel and the US in connection with Iran.
It found that 84% transacted in USDT, such as to help the Iranian government move money across its borders and support its currency amid US sanctions, including through the Central Bank of Iran.
The report “exposes how Tether and its flagship token have become central to Iran’s shadow banking system,” allowing the Iranian government to fund a range of activities, Blumenthal said in a statement. He called for the Treasury and Justice Departments to investigate Tether.
Tether’s USDT is the world’s largest dollar-backed stablecoin. In a statement, the company said it was committed to cooperating with the US government, and said it supported the freezing of nearly $550 million in Iran-linked USDT in 2026.
“Tether has consistently demonstrated that USD₮ is not a haven for sanctioned actors, terrorist organizations or criminal networks,” Tether CEO Paolo Ardoino said in the statement.
Following the start of the US military campaign against Iran this year, the Treasury Department has stepped up sanctions against the Islamic Republic. Last month, it launched Operation Economic Outcast, which included a focus on crypto transactions.
(Reporting by Chandni Shah in Bengaluru; Editing by Michelle Price and Alistair Bell)