The Democratic minority on a powerful US Senate investigative panel has found that 84 per cent of digital wallets in an Iran-focused sanctions probe traded exclusively or almost exclusively in Tether's USDT stablecoin.
This places the company at the centre of questions over how Iran, Hamas, Hezbollah and the Houthis move money outside the traditional banking system.
Separate US enforcement actions and blockchain analysis have documented USDT's use in financial networks connected to all four groups, even as Tether insists it cooperates with law enforcement and has not been charged with sanctions or terrorism offences.
Iran's Shadow Banking Network Runs Through USDT
Iran is the direct focus of the Senate minority's latest investigation. On 28 September 2026, the Democratic minority of the Senate Permanent Subcommittee on Investigations said 84 per cent of the wallets it analysed transacted exclusively or almost exclusively in USDT.
The wallets had already been sanctioned, targeted for seizure or otherwise identified in connection with the investigation.
The report, titled 'Tethered to Terrorism: Crypto & Iran's Shadow Banking Network', asks Treasury Secretary Scott Bessent to examine Tether's sanctions and anti-money-laundering controls. The letter requests Treasury records by 9 October 2026.
The investigators said the wallets in their sample showed a heavy reliance on USDT and argued that stablecoins had become increasingly important to Iranian shadow banking and sanctions evasion. The finding does not establish that Tether financed the Iranian government or its proxies.
Tether said it supported freezes of more than $344 million across two Iran-linked addresses in April. OFAC subsequently identified those addresses as digital-currency identifiers for Iran's central bank. In July, Tether said it froze more than $130 million across four TRON wallets, putting its 2026 Iran-linked total at about $550 million.
Separate blockchain analysis has also identified large USDT transactions connected to Iranian financial networks. Elliptic said Iran's central bank had acquired at least $507 million in USDT through wallets it could attribute to the institution with high confidence.
Hamas Used USDT in a Rotating Fundraising Network
The Hamas evidence comes from a separate Justice Department and FBI investigation. The Justice Department said on 1 September that the FBI had seized more than $560,000 in cryptocurrency intended for Hamas's Al-Qassam Brigades.
Court documents described a fundraising operation in which supporters were given a rotating set of cryptocurrency donation addresses. Investigators used seizure warrants in March, June and October 2025 to trace and seize funds.
Earlier Justice Department filings described a related operation in which more than $1.5 million in virtual currency was laundered from Hamas fundraising addresses after October 2024. A March 2025 seizure included about $201,400 in cryptocurrency, including USDT.
The Senate letter separately alleges that Gaza Now continued soliciting USDT after its March 2024 US designation over alleged Hamas associations. That allegation comes from the congressional letter, rather than a court finding.
Hezbollah Appears in Iran's USDT-Linked Sanctions Network
The Hezbollah evidence is tied more closely to Iran's financial infrastructure than to a separately quantified Hezbollah treasury. The Senate minority included Hizballah among the groups whose associated wallets and transactions appeared in its broader review.
Tether's account of its April freeze is also relevant: the company said OFAC subsequently identified the two addresses as Central Bank of Iran digital-currency identifiers and linked that designation to the IRGC-Qods Force and Hizballah.
That establishes a documented connection between USDT held at designated addresses and a sanctions network involving Iran and Hezbollah. It does not establish that the more than $344 million frozen in April was controlled by Hezbollah.
Houthi Networks Used USDT Through Iranian Financial Channels
The Houthi evidence comes from sanctions records and blockchain analysis involving Iranian financier Sa'id Ahmad Muhammad al-Jamal. Elliptic reported in December 2024 that OFAC had added five TRON addresses associated with al-Jamal to its sanctions list over transactions involving USDT.
Its analysis found that the five addresses received $332 million, primarily in USDT, between November 2023 and November 2024, although some of the transfers were between the addresses themselves.
Al-Jamal had previously been designated by the US Treasury for providing tens of millions of dollars to the Houthis in cooperation with senior IRGC-Qods Force officials. The $332 million therefore measures transactions through addresses associated with his network, rather than establishing that the entire amount was controlled by the Houthis.
Tether Can Freeze USDT Once a Wallet Is Identified
USDT also differs from physical dollars in that Tether can blacklist addresses and restrict the movement of tokens held there. Tether said on 28 September that it had supported more than 2,900 investigations globally and frozen more than $4.9 billion in assets. The company says it works with law-enforcement agencies to identify and freeze illicit wallets.
Blumenthal's letter questions what happened before those freezes. It cites Iranian businessman Babak Zanjani, who publicly posted Central Bank of Iran wallet addresses in December 2025, and asks Treasury to examine whether Tether failed to blacklist wallets that had already been identified.
The letter also asks Treasury about a reported 2024 investigation into Tether, its relationship with Cantor Fitzgerald and Bo Hines's appointment as chief executive of Tether's US subsidiary in September 2025. Those matters are presented as questions for Treasury to examine, not findings of wrongdoing.
The Senate's 84 per cent figure belongs to its Iran-focused wallet sample. The Hamas, Hezbollah and Houthi evidence comes from separate enforcement and blockchain records involving the same stablecoin.
