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Basis Desk
Regulation & Policy · 1 min read

Senator Blumenthal Urges DOJ and Treasury to Probe Tether Over Iran Financing

A Senate PSI report alleges 84% of sanctioned Iran-linked crypto wallets operated almost exclusively in USDT, calling for federal scrutiny of the stablecoin issuer.

Editorial oversight: Julian Mercer, Chief Editor
Bearish
$USDT $0.9995 −0.0% $BTC $83,789 −0.7%

Key points

  • A Senate PSI report found 84% of 846 Iran-linked sanctioned wallets transacted almost exclusively in Tether's USDT.
  • Senator Richard Blumenthal formally asked the Treasury and DOJ to probe Tether for potential BSA and sanctions violations.
  • The report highlighted that Cantor Fitzgerald holds a 5% equity stake in Tether as well as custody of over $100 billion in reserves.

U.S. Senator Richard Blumenthal, Ranking Member of the Senate Permanent Subcommittee on Investigations (PSI), released a report on Sept. 28 alleging that stablecoin issuer Tether has become a critical financial rail for Iran's shadow banking apparatus 1. In letters directed to Treasury Secretary Scott Bessent and Attorney General Todd Blanche, Blumenthal demanded immediate federal inquiries into whether Tether violated anti-money laundering regulations and sanctions frameworks, including the Bank Secrecy Act and the International Emergency Economic Powers Act 1.

The inquiry's conclusions stem from a forensic review of 846 designated or targeted cryptocurrency wallets connected to Iran and regional proxy networks 1. According to the PSI report, 84% of those addresses transacted predominantly or entirely in Tether's dollar-pegged token, $USDT 1. Investigators stated the network facilitated capital flight, currency stabilization efforts tied to the Central Bank of Iran, and military transactions such as drone procurement, while noting that groups including Hamas largely transitioned away from $BTC toward USDT 1. Although Tether has frozen Iran-linked USD₮ in previous enforcement waves, the report asserts that Tether failed to systematically freeze targeted addresses prior to 2024 and still does not proactively restrict illicit accounts 1.

Scrutiny Over Political Ties

Blumenthal also targeted perceived conflicts of interest between crypto enforcement and the Trump administration 1. The report highlighted that financial firm Cantor Fitzgerald—formerly directed by Commerce Secretary Howard Lutnick and now operated by his children—holds a 5% stake in Tether alongside a substantial portion of the company's custodial reserves, which exceed $100 billion 1. Blumenthal argued that prior regulatory inquiries across the digital asset sector have been scaled back or abandoned, urging the Department of Justice and the Treasury to examine Tether's compliance procedures regardless of political connections 1. At the time of writing, USDT traded flat at $0.9996.

Questions this story raises

What did the Senate PSI report reveal about Tether and Iran?
The report found that 84% of 846 cryptocurrency wallets sanctioned or targeted for ties to Iran and its regional proxies transacted almost exclusively in Tether's USDT.
What actions did Senator Blumenthal request from federal agencies?
Blumenthal sent letters urging Treasury Secretary Scott Bessent and Attorney General Todd Blanche to investigate Tether for potential violations of the Bank Secrecy Act and the International Emergency Economic Powers Act.
How is Cantor Fitzgerald involved with Tether according to the report?
According to the report, Cantor Fitzgerald owns 5% of Tether and holds custody of a substantial portion of the stablecoin issuer's more than $100 billion in reserves.

Sources

  1. [1] Blumenthal Releases PSI Report Detailing how Lutnick-Linked Crypto Firm Tether Props Up Iran's Shadow Banking System | U.S. Senator Richard Blumenthal of Connecticut — blumenthal.senate.gov, September 30, 2026

Written by Basis Desk's newsroom system from the primary sources above and machine-verified against them before publication. Market figures marked "at the time of writing" come from live exchange data. Report an error: corrections@basisdesk.news · corrections policy.

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Not financial advice. Basis Desk publishes information, not recommendations. Crypto assets are volatile and you can lose what you invest.