Tether says it froze about $550M in Iran-linked USDT in 2026. The April wallets held a largely dormant reserve built since 2021. Senate investigators say 84% of sanctioned Iran-linked wallets
Tether says it has frozen roughly $550 million in USDT this year across wallets that U.S. authorities linked to the Central Bank of Iran and its sanctions networks. The disclosure came on September 28, the same day Senate investigators released findings describing USDT as a core part of Iran’s shadow financial system.
Tether presents the freezes as proof that a public-ledger dollar token is a poor tool for sanctions evasion. The Senate investigators focus on timing, since some of the frozen wallets had been collecting funds for years before anyone identified them.
On April 23, Tether said it had helped the U.S. government freeze more than $344 million in USDT at two addresses, acting on information from OFAC and U.S. law enforcement. The next day, OFAC listed both addresses as identifiers tied to the Central Bank of Iran.
TRM Labs found that the two wallets had received about $370 million across nearly 1,000 transactions since March 2021. Only about $25 million ever left. Most of the balance had built up by late 2023 and then barely moved. TRM said this pattern looked more like reserve infrastructure than a working payments wallet.
In July, OFAC added four more addresses on TRON to its Central Bank of Iran designation. Chainalysis found they had received about $165 million in stablecoins and held about $131 million when Tether froze them.
Tether’s release presents those two actions as making up its roughly $550 million total. Its own figures, however, add up to about $475 million, and the company has not explained the gap.
Freeze action Wallets Lifetime inflows USDT frozen April 2026 2 ~$370M (TRM Labs) ~$344.2M July 2026 4 (TRON) ~$165M (Chainalysis) ~$131M Disclosed subtotal 6 ~$535M ~$475.2M Tether’s stated 2026 total n/a n/a ~$550MIn January, Elliptic identified wallets through which the Central Bank of Iran had acquired at least $507 million in USDT. Elliptic called that figure a lower bound. Leaked documents showed that two of the purchases, in April and May 2025, were paid for in UAE dirhams.
Iran has little access to dollar clearing or correspondent banks, and USDT offered a workable substitute. Elliptic said the funds helped support the rial and made cross-border settlement possible outside the banking system. Before June 2025, much of the USDT went to Nobitex, Iran’s largest crypto exchange. Elliptic said that pattern was consistent with injecting dollar liquidity into the domestic market. Tether had already blacklisted several central bank-linked wallets on June 15, 2025, freezing about 37 million USDT, according to Elliptic.
In June 2025, the pro-Israel hacking group Predatory Sparrow attacked Nobitex. Afterward, Elliptic saw central bank-linked funds move through cross-chain bridges and longer transaction paths. Some of those funds later reached Shelbit, a Dubai-based exchange that OFAC has since sanctioned. On June 2, 2026, OFAC also designated Nobitex, Wallex, Bitpin and Ramzinex. Elliptic estimates the four exchanges sent or received at least $40 billion in crypto between them.
The Wall Street Journal reported that Democrats on the Senate Permanent Subcommittee on Investigations concluded USDT had become an important payment mechanism in Iran-linked networks, including ones connected to Hezbollah. According to reporting on the inquiry, investigators reviewed 846 sanctioned Iran-linked wallets and found that about 84% relied exclusively or mostly on USDT.
The probe started months ago. On June 4, Senator Richard Blumenthal, the subcommittee’s ranking member, wrote to Tether CEO Paolo Ardoino, citing what he called an apparent failure to prevent illicit use. He asked whether Tether had frozen all USDT tied to the four Iranian exchanges. He also asked whether it had ever declined to blacklist a wallet it suspected of illicit activity. These remain allegations and questions from lawmakers.
Ardoino argues that USDT is a poor sanctions-evasion tool because every transfer is visible on-chain and Tether can blacklist an address once authorities flag it. The balance stays visible but can no longer move. Seizing bitcoin usually requires the private keys or a cooperating custodian. With USDT, the issuer controls the token contract directly.
The company says it works with more than 340 law enforcement agencies in 67 countries. It says it has frozen over $4.9 billion tied to illicit activity, more than $2.4 billion of that with U.S. authorities.
The Iran-linked sums are small against the size of the network. According to Messari, USDT processed $4.4 trillion on-chain in the fourth quarter of 2025, and 88% of transfers were under $1,000. Most of that traffic is everyday payments, far removed from a central bank parking hundreds of millions in a handful of wallets.
The freezes are part of a wider Treasury push. Operation Economic Outcast, launched on August 24, targets financial channels that support the Iranian government and the IRGC, including digital assets. On September 17, OFAC sanctioned BitBank. Treasury alleges the platform was controlled by the sanctioned financier Babak Zanjani and used to move hundreds of millions of dollars in bitcoin to the IRGC.
Iran wanted digital dollars because it had lost access to real ones. USDT gave it global liquidity and round-the-clock settlement without a correspondent bank. It also left the reserve dependent on a private issuer that works with U.S. authorities. The April freeze showed the cost of that dependence: holdings built up over five years became unusable in a day.
The same wallets support the Senate’s concern. They received funds from March 2021 and were not frozen until April 2026. On-chain records made it possible to reconstruct their history and lock what remained. It is less clear how much that transparency did while the money was still moving.
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