A Senate investigation is putting Tether’s compliance model under pressure. Investigators reviewed 846 crypto wallets that were either sanctioned or targeted for seizure, including 757 tied by Israel’s National Bureau for Counter Terror Financing. In that group, 87% used USDT as the main vehicle. In the wallets investigators reviewed, Iran-linked flows relied heavily on Tether’s token.
The sharper issue is what Tether did once those wallets were identified. Lawmakers are focused less on whether the activity was traceable, and more on whether Tether froze sanctioned wallets quickly and consistently enough. The investigation says that did not always happen without outside pressure. Tether says it has frozen nearly $550 million in Iran-linked USDT this year and says its policy now matches the U.S. Treasury sanctions list. The enforcement test is whether stablecoin issuers are expected to step in at the wallet level as soon as flagged addresses are identified.