Tether Froze $550M in Iran-Linked USDT. $34.6M Left First.

Tether says it froze about $550 million in Iran-linked USDT during 2026. Democratic staff on the Senate Permanent Subcommittee on Investigations say at least $34.6 million slipped out the door before the freezes landed.

Both numbers are real. They just don't describe the same thing.

The minority report, out Sept. 28, examined 846 wallets that US or Israeli authorities had sanctioned or targeted for seizure over Iran ties. Notably, 84% of them transacted exclusively or nearly exclusively in USDT. That's a selected population, not a measure of illicit activity across the stablecoin. But it's a striking concentration, and it's the kind of detail that turns a compliance question into a congressional referral. Sen. Richard Blumenthal sent the findings to Treasury and Justice and asked them to scrutinize Tether's AML and sanctions controls. Neither agency has confirmed a new case.

Here's what the filing actually says about timing. Investigators pulled 39 addresses that Israel's NBCTF flagged in June 2023 as tied to Tawfiq Muhammad Sa'id al-Law, later sanctioned by Treasury for providing financial services to Hezbollah. Five got blacklisted right away. The other 34 sat unfrozen until March 2024. In that window, more than $34.6 million in USDT moved out.

Tether's counter is straightforward. On April 23, it froze over $344 million across two addresses after OFAC and other agencies passed along information. OFAC added those same addresses to the Central Bank of Iran's sanctions entry the next day. In July, another $130 million across four wallets. Those two actions alone account for at least $474 million of the $550 million headline. Tether hasn't published a wallet-by-wallet reconciliation backing the full total.

Reading between the lines, the interesting part isn't whether Tether cooperates. It's that freeze power is discretionary by design. An issuer can immobilize hundreds of millions once it knows where to look, and it can't act on what nobody has told it yet. That's not a Tether problem so much as a stablecoin architecture problem. Congress is now treating it as one.

Tether also hasn't answered the subcommittee's June 4 document request, at least as of the report's release. And a separate DOJ forfeiture action is chasing about $61 million in crypto tied to Iranian oil sales, with prosecutors alleging the wider network moved $1.5 billion.

The precedent here's important. If Treasury and Justice open a formal inquiry, how fast an issuer must freeze stops being a corporate judgment call and becomes an enforcement standard. Watch the referrals, not the press statements.