Iran has relied heavily on a dollar-pegged cryptocurrency issued by Tether to evade U.S. sanctions, according to a Senate report. The company has deep financial ties to the family and former firm of Commerce Secretary Howard Lutnick.
The report from the Senate Permanent Subcommittee on Investigations, led by Sen. Richard Blumenthal (D-CT), found that Tether's USDT stablecoin has become a primary payment method for the Iranian regime and a source of funding for proxy groups such as Hezbollah, reported the Wall Street Journal.
Investigators examined 846 crypto wallets sanctioned by the U.S. and Israel in connection with Iran and found that 84 percent traded almost exclusively in USDT. The report also faults Tether for failing to quickly freeze tokens held in sanctioned wallets.
Blumenthal said the findings show how Tether has become "central to Iran's shadow banking system," helping Tehran "fund its regional proxies, commit human-rights abuses, and pursue hostile drone and missile programs."