Democratic staff on the Senate Permanent Subcommittee on Investigations released a preliminary report Sept. 28 concluding that USDT was the dominant asset across 846 crypto wallets sanctioned or targeted for seizure by US or Israeli authorities over alleged ties to Iran and regional groups. The same report prompted Sen. Richard Blumenthal to refer the findings to the Treasury and Justice departments, asking both to examine Tether's anti-money laundering and sanctions compliance.
The referral doesn't establish that Tether broke any federal law, and it doesn't mean either department has opened a fresh case. It does put a spotlight back on how quickly the world's largest stablecoin issuer freezes funds once authorities hand over names.
The 84% finding
Subcommittee investigators reviewed wallets tied to Iran-linked entities and found that 84% of them transacted exclusively, or nearly exclusively, in USDT. The report is the work of Democratic minority staff, not the full committee, and it lands as a preliminary document — which matters, since the numbers inside it are being used to argue for a closer look rather than to announce charges.
Tether has publicly pointed to the opposite scoreboard: millions in USDT it says it has frozen at the request of US agencies. On April 23, the company said it helped authorities freeze more than $344 million across two addresses after receiving information from OFAC and other US law enforcement agencies. OFAC followed the next day by updating the Central Bank of Iran's existing sanctions entry to add those same two blockchain addresses as digital-currency identifiers.
In July, Tether said more than $130 million across four wallets was frozen as Treasury expanded the Central Bank of Iran's listed blockchain addresses. Those two disclosed actions alone account for at least $474 million of the roughly $550 million Tether says it froze during 2026. The company hasn't published a wallet-by-wallet breakdown reconciling the disclosed examples with the full headline total.
The 34 al-Law wallets
The most detailed example in the report involves 39 wallets that Israel's NBCTF identified in June 2023 as tied to Tawfiq Muhammad Sa'id al-Law, whom the US Treasury later sanctioned for providing financial services to Hezbollah. Five of those addresses had been blacklisted. The other 34 weren't frozen until March 2024.
Senate investigators calculated that more than $34.6 million in USDT moved out of those wallets after the Israeli seizure notice was published and before the remaining addresses were frozen. That gap — roughly nine months — is the report's central factual hook. It's the kind of window that sanctions enforcers care about, because once funds leave a wallet, freezing becomes a recovery problem rather than a prevention one.
Tether's response
In a Sept. 28 public statement, Tether said it acts when authorities provide credible information. CEO Paolo Ardoino argued that public blockchains give investigators visibility into fund movements that cash doesn't — a familiar line from the company, and a fair one in the abstract, though it doesn't answer the specific timing question the report raises.
The statement did not directly address the 846-wallet analysis or the $34.6 million example. The report also notes that Tether acknowledged receiving a June 4 request for information and documents from the subcommittee but had not responded as of publication.
A separate forfeiture case
Alongside the Senate report, a US forfeiture case is seeking roughly $61 million in cryptocurrency allegedly tied to black-market Iranian oil sales. Federal prosecutors say the wider network moved more than $1.5 billion in proceeds, with some funds allegedly intended to benefit Iran's government and military, including the Islamic Revolutionary Guard Corps.
The Treasury and Justice departments now have the referral in hand. Whether either opens a formal investigation — and whether Tether answers the subcommittee's June 4 document request — is the next thing to watch.
