Iran Exploits Crypto to Evade US Sanctions, Senate Report Alleges

A forthcoming US Senate report claims Iran is extensively using Tether's digital dollars (USDT) to circumvent American sanctions, according to findings set to be released Monday. The investigation, led by Senator Richard Blumenthal, indicates that USDT has become a primary payment method for the Iranian regime and a tool for funding terrorist proxies like Hezbollah.

The report analyzed 846 crypto wallets sanctioned by the US and Israel in connection with Iran, finding that 84% exclusively or almost exclusively conducted transactions using USDT. Blumenthal stated the report reveals how Tether and its stablecoin have become central to Iran's shadow banking system, enabling the regime to fund drone and missile projects and violate sanctions.

Investigators have forwarded their findings to the US Departments of Justice and Treasury, coinciding with broader US efforts to increase economic pressure on Tehran. The report suggests Iran has used these digital dollars to support its national currency, the Rial, sell oil to allies like China, and has linked some purchases to $1.5 billion stolen from the Bybit crypto exchange by North Korea.

The document sharply criticizes Tether for not acting swiftly enough to freeze regime-linked wallets, despite some cooperation with law enforcement. However, blockchain data suggests Iran's USDT usage may be declining, with transaction volume in sanctioned wallets dropping from 72% in 2024 to 67% in 2025, and falling to approximately 14% in August, though USDT remains significant in wallets tied to recent oil deals.