Tether has claimed that its wallet-freezing measures reduced Iran-linked stablecoin transaction volumes by 94%, defending its sanctions compliance practices amid scrutiny from US lawmakers over the use of USDT in illicit financial networks.
Chief Executive Paolo Ardoino made the claim on October 19, 2026, responding to a report from Democratic staff of the Senate Permanent Subcommittee on Investigations that raised concerns about Tether’s handling of sanctioned cryptocurrency addresses.
Ardoino said the company had proactively frozen wallets associated with sanctioned entities, often before authorities formally designated those addresses.
However, Tether has not publicly disclosed the underlying transaction data, measurement period or methodology supporting the 94% reduction. The figure therefore remains a company claim rather than an independently verified measure of declining illicit activity.
The dispute comes as stablecoins face increasing regulatory attention over their potential use in sanctions evasion, cross-border payments and financial crime.
Tether Defends Its Record Against Senate Findings
Ardoino said that, since 2023, Tether had frozen relevant cryptocurrency addresses an average of four weeks before their formal designation by the US Treasury’s Office of Foreign Assets Control or Israel’s National Bureau for Counter Terror Financing.
He also claimed that Tether acted before blockchain analytics firm Chainalysis identified the addresses in 99% of relevant cases. The statements challenge findings published on September 28 by Senate investigators working under Senator Richard Blumenthal.
Their report examined 846 cryptocurrency wallets sanctioned or targeted for seizure between June 2021 and August 2026 because of connections to Iran or its regional proxies. Investigators found that 84% of those wallets conducted transactions exclusively or almost exclusively using Tether’s USDT stablecoin.
The report also identified instances in which wallets remained operational after their connections to sanctioned entities became apparent. In one case involving wallets linked to Hezbollah financier Tawfiq Muhammad Sa’id Al-Law, investigators alleged that more than $34.6 million in USDT moved from addresses before Tether completed freezes.
Blumenthal subsequently requested investigations by the Treasury and Justice departments into the company’s sanctions compliance practices. Tether disputes the characterization of its enforcement record, emphasizing its cooperation with law enforcement and its ability to immobilize tokens held at identified addresses.
$550 Million in Freezes Highlights Stablecoin Enforcement Powers
In a September 28 statement, Tether disclosed that approximately $550 million in USDT linked to Iranian financial networks had been frozen during 2026. The company identified more than $344 million frozen across two addresses in April, followed by over $130 million across four additional wallets in July.
Those actions involved addresses associated with the Central Bank of Iran and broader sanctions networks. Independent blockchain research has also documented the April and July freezes, although investigators identified transfers from some related wallets before enforcement was completed.
The developments illustrate both the capabilities and limitations of centralized stablecoins. Unlike Bitcoin, USDT includes issuer-controlled functionality that can prevent designated addresses from transferring tokens. This enables cooperation with law enforcement but does not necessarily prevent funds from moving before suspicious activity is detected.
Furthermore, a reduction in transactions involving USDT would not establish an equivalent decline in overall Iranian cryptocurrency activity if users migrated to other assets or networks. Blockchain analytics firm TRM Labs has separately reported a decline in USDT’s share of Iran-attributed on-chain activity, but that measure is not equivalent to Tether’s claimed 94% volume reduction.
For regulators, the central question is whether stablecoin issuers can identify and restrict illicit activity consistently and promptly. Tether’s latest statements demonstrate its willingness to defend its compliance record publicly, but the competing claims remain unresolved.
Independent verification of the transaction data and any subsequent regulatory findings will be necessary to establish the effectiveness of its enforcement measures.