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."
The subcommittee referred the report to the Justice and Treasury departments. Tether's representatives did not respond to requests for comment.
The findings spotlight Tether's close relationship with Cantor Fitzgerald, the financial firm Lutnick ran for more than three decades before joining Trump's Cabinet.
Cantor has earned fees managing Tether's reserves since 2021, and Lutnick has said he personally negotiated that relationship. In 2024, Cantor invested in Tether through a $600 million convertible bond that entitles it to a 5 percent stake. Bloomberg has reported that the stake could be worth as much as $25 billion if Tether reaches its target valuation.
To comply with federal ethics rules, Lutnick sold his interest in Cantor in October 2025 to trusts benefiting his four children. Around the same time, one of those trusts borrowed an undisclosed sum from Tether, according to Bloomberg. A Cantor executive said the loan was backed by the convertible bond tied to Tether's stake.
A spokesman for Cantor and the Lutnick children declined to say whether the loan helped pay for the purchase.
"This transaction is in theory supposed to eliminate a conflict of interest, but in reality it creates a new one," said Washington University law professor Kathleen Clark.
The Commerce Department has said Lutnick "has fully complied with the terms of his ethics agreement, including all divestiture and recusal requirements."
Tether has also benefited from the Trump administration's friendlier approach to crypto.
The administration has disbanded crypto enforcement teams at the Justice Department and the SEC. The Genius Act, which Trump signed in July 2025, gives the El Salvador-based company a three-year grace period before it must comply with U.S. rules.