A Senate Permanent Subcommittee on Investigations report led by Senator Richard Blumenthal alleged that Tether's USDT stablecoin has become a significant financial channel for Iran's shadow banking network. The report, titled "Tethered to Terrorism," reviewed 846 cryptocurrency wallets sanctioned or targeted for seizure by U.S. or Israeli authorities between June 2021 and August 2026 for connections to Iran and regional proxies, finding that 84% transacted exclusively or nearly exclusively in USDT. The USDT concentration was higher among wallets designated by Israel's National Bureau for Counter Terror Financing than in the Office of Foreign Assets Control sample, the report said. Investigators said two sanctioned oil smugglers, Alireza Derakhshan and Arash Estaki Alivand, moved more than $603 million in USDT between 2021 and 2025 through a network connected to Hizballah, the Houthis and Iranian financial institutions. The report alleged that Tether did not consistently freeze certain counter-terrorism-designated wallets before 2024, allowing more than $34.6 million to move after designation, and Blumenthal asked the Treasury and Justice departments to investigate the company's anti-money-laundering and sanctions compliance. Tether did not address the Senate report directly, but said it had frozen roughly $550 million across wallets U.S. authorities linked to Iran's central bank during 2026 and had frozen more than $4.9 billion across all cases while working with more than 340 agencies in 67 countries.