U.S. Senate PSI Report Finds USDT Dominant Across Iran-Linked Sanctioned Crypto Wallets

Democratic investigators for the U.S. Senate Permanent Subcommittee on Investigations (PSI) have released a report examining the role of Tether’s USDT stablecoin in cryptocurrency wallets sanctioned or targeted for seizure because of links to Iran and its regional proxies.

The analysis covered 846 unique cryptocurrency wallets. According to PSI Democratic investigators, 84% of those wallets transacted exclusively or nearly exclusively in USDT.

The report describes USDT as a significant payment mechanism within Iran-linked cryptocurrency networks and says the wallets reviewed included activity associated with sanctions evasion, Iranian government financial activity and regional proxy organisations. The investigators also examined the use of cryptocurrency in procurement and sales involving drones and other military equipment.

PSI’s Democratic investigators raised concerns about Tether’s historical approach to freezing designated or illicit wallets. The report states that before 2024 Tether did not comprehensively and consistently freeze wallets designated by counter-terrorism authorities and alleges continuing weaknesses in proactively blocking illicit wallets.

Senator Richard Blumenthal, the Subcommittee’s ranking member, referred the findings to the U.S. Treasury Department and Department of Justice and requested investigations into Tether’s anti-money laundering and sanctions compliance practices.

The report and referral do not constitute a finding by Treasury, DOJ or a court that Tether violated U.S. law. The claims concerning Tether’s compliance are findings and allegations of PSI Democratic investigators, and the requested federal investigations would determine whether violations occurred.

The wallet-level findings are relevant to sanctions-screening and ongoing-monitoring controls for stablecoins because they illustrate how exposure can persist across blockchain addresses even where the underlying actors or associated networks have been publicly designated.

Source

Office of U.S. Senator Richard Blumenthal, “Blumenthal Releases PSI Report Detailing how Lutnick-Linked Crypto Firm Tether Props Up Iran’s Shadow Banking System”, 28 September 2026.