Tether's chief executive says the company typically blocks suspect wallets a month ahead of official sanctions designations and has driven Iran-linked stablecoin activity down 94%, a figure he gave without a time frame or starting point. A Senate Democratic staff report points to a case in which most of a group of designated wallets stayed open for months.
Tether says it moves before governments do. Its critics in the Senate say it moves inconsistently. The numbers each side uses start from different points.
Paolo Ardoino, Tether's chief executive, said on X on Monday that "since 2023, Tether froze on average 4 weeks prior to OFAC & NBCTF official sanction designation and for 99% of the times Tether froze the reported addresses before Chainalysis labelled them." OFAC is the U.S. Treasury's sanctions office and NBCTF is Israel's National Bureau for Counter Terror Financing. He said the company's actions "led to Iran-linked stablecoin volumes declining by 94%." He did not specify the period the 94% covers or what it was measured against.
He was responding to a Sept. 28 report from Democratic staff of the Senate Permanent Subcommittee on Investigations that described Tether's USDT as central to Iran's shadow banking network.
What the report found
Senator Richard Blumenthal's office said that 84% of the 846 wallets sanctioned for links to Iran and its proxies dealt solely or almost solely in USDT. Blumenthal has asked the Treasury and the Justice Department to look into possible breaches of U.S. sanctions and anti-money-laundering law.
The report's main example dates to June 2023, when Israel's counter-terror financing bureau listed 39 wallets linked to a Hezbollah financier. Tether froze five. The remaining 34 were left open until March 2024, and by then more than $34.6 million of USDT had moved out of them. The report calls Tether's enforcement "uneven and inconsistent."
Tether has said it froze about $550 million of Iran-linked USDT in 2026, including more than $344 million across two addresses in April.
Different clocks
The two accounts are not necessarily in conflict. Ardoino measures Tether's freezes against the date a designation becomes public. The report measures against the date a designation was made. A summary of the report published by the crypto exchange Gate cites a footnote noting that Israeli designation orders have at times been published weeks or months after they were signed. If so, that gap would allow Tether to act before publication while still lagging the order itself.
That distinction does not settle the dispute, but it explains how both sides can cite the same events and reach opposite conclusions.
Where the stakes are
The investor question is regulatory. USDT is the largest stablecoin, with about $187 billion in circulation. U.S. rules under the GENIUS Act, the federal stablecoin law, are still being written, including how foreign issuers such as Tether may serve U.S. users; the Treasury's comment period on a key section closed on Oct. 19. A request for an investigation is not an investigation, and no agency has announced one. But sanctions scrutiny from Congress lands at the moment those rules are being drafted.
Market implications
One reading is that Tether's record is stronger than the report suggests. It has frozen hundreds of millions of dollars of Iran-linked tokens this year, often before designations are published.
A second reading is that the report's case study shows gaps that matter. Funds left designated wallets for months, and a 94% figure without a stated baseline cannot be checked.
A third reading is that the political temperature, not the enforcement record, is the risk. Scrutiny during the GENIUS rule-making could shape how easily USDT reaches U.S. users.
What to watch
Any response from the Treasury or the Justice Department to Blumenthal's request; Tether's publication of the methodology behind the 94% figure; the Treasury's GENIUS Act rules on foreign issuers; and USDT's market share against regulated U.S. stablecoins. A formal inquiry by either agency would change the story from a dispute over data to a regulatory risk.