Minority staff on the Senate Permanent Subcommittee on Investigations said on September 28, 2026 that 84% of crypto wallets sanctioned for ties to Iran or its affiliated proxies transacted primarily in Tether's USDT stablecoin, according to a 28-page report the panel released that day.

The document, titled "Tethered to Terrorism: Crypto & Iran's Shadow Banking Network," examined 846 wallets designated for sanctions or seizure between June 2021 and August 2026. All of them were flagged by either the US Treasury's Office of Foreign Assets Control (OFAC) or Israel's National Bureau for Counter Terror Financing.

What does the report cover?

The 846 wallets split unevenly between the two designating authorities. 757 wallets were flagged by Israel, and 101 were designated by OFAC. The breakdown of USDT usage diverges sharply between the two groups:

• 87% of the Israeli-flagged wallets transacted mainly in USDT
• 57% of the 101 OFAC-designated wallets transacted mainly in USDT
• Combined across the full 846-wallet set, 84% transacted primarily in USDT

The report frames USDT as a financial rail for what it calls Iran's shadow banking network and links USDT-denominated flows to Iranian proxies including Hezbollah and Hamas. One case stands out: a network of sanctioned oil smugglers moved more than $603 million in USDT during the review period.

How is Tether defending its record?

Tether has moved quickly to publicize its 2026 enforcement work. The company said it has frozen roughly $550 million in Iran-affiliated USDT so far this year. That total includes $344 million frozen in April and tied to two wallets associated with the Central Bank of Iran.

The minority staff report, however, points to inconsistencies in how Tether handled wallet freezes before 2024. The implication is that earlier enforcement was uneven, even as Tether's recent action has been substantial. Tether's defense rests on its 2026 record; the report's critique rests on what happened before that.

Where does the referral go?

Senator Richard Blumenthal of Connecticut, who is leading the subcommittee effort, has referred the findings to the Treasury Department and the Justice Department. The referral asks both agencies to determine whether Tether complied with US sanctions and anti-money-laundering rules.

Blumenthal's letter to the two departments sets a response deadline of October 9, 2026, an 11-day window from the report's release.

What weight does a minority-staff report carry?

A document produced by minority staff does not bind the full Senate Permanent Subcommittee on Investigations. Republicans control the subcommittee's official agenda, and the report does not constitute a committee finding. The referral nevertheless places Tether's compliance posture formally before the two agencies with primary jurisdiction over US sanctions and AML enforcement.

Treasury and Justice now have until October 9 to respond, converting what would otherwise be a policy paper into a defined compliance clock, regardless of whether the full committee takes the matter up.