Senate Report Details Alleged Delays in Wallet Freezes

Democratic staff of the Senate Permanent Subcommittee on Investigations reviewed 846 wallets linked to Iran or its regional proxies that had been sanctioned or targeted for seizure between June 2021 and August 2026. The analysis found that 84 percent of those wallets transacted exclusively or nearly exclusively in USDT.

Specific focus fell on 39 addresses identified by the Israeli National Bureau for Counter Terror Financing in June 2023 as connected to a Hezbollah money launderer. Investigators noted that five wallets were frozen early, but the remaining 34 remained unblocked until March 2024. More than $34.6 million in USDT moved out of the wallets after the seizure notice became public, according to the preliminary report.

Senator Richard Blumenthal referred the findings to Treasury Secretary Scott Bessent and Attorney General Todd Blanche. His office requested investigations into potential violations of the Bank Secrecy Act and the International Emergency Economic Powers Act, calling for enforcement action if breaches are confirmed.

Tether Defends Compliance Record with Timing Metrics

Tether CEO Paolo Ardoino responded on October 19 by comparing company actions against official designations from the U.S. Treasury’s Office of Foreign Assets Control and Israel’s National Bureau for Counter Terror Financing, as well as blockchain analytics labels from Chainalysis. He stated that freezes occurred an average of four weeks ahead of those designations across the period since 2023.

Ardoino also claimed that Tether acted before Chainalysis assigned labels in 99 percent of cases. He attributed a 94 percent decline in Iran-linked stablecoin volumes to enforcement efforts and credited partnerships with law enforcement agencies for improved response to emerging threats.

In a September 28 statement, Tether reported nearly $550 million in Iran-linked USDT freezes during 2026, including more than $344 million across two addresses frozen in April and more than $130 million across four additional wallets in July. The company said the actions followed information supplied by U.S. authorities, with OFAC adding the April addresses to its Central Bank of Iran sanctions list the following day.

Separate Forfeiture Case Targets Additional USDT

Court records show that Tether froze ten TRON addresses holding $61.2 million in USDT in June and July 2025. A September 14, 2026, warrant authorized government custody, while a federal civil forfeiture complaint seeks transfer of ownership to the United States. Prosecutors allege the funds originated from Iranian oil sales.

Broader Context of USDT and Sanctions

Ardoino highlighted that Tether’s approach has evolved since 2024, with faster and more consistent responses to flagged addresses. The company maintains that its freezes have significantly reduced Iran-linked stablecoin activity while supporting broader law enforcement requests. Blumenthal’s office continues to examine the record for any potential regulatory implications under U.S. sanctions frameworks.