Tether Claims Freezing Occurred Before Sanctions, Iran-Related Trading Volume Down 94%
Tether CEO Paolo Ardoino responded to U.S. Senator Blumenthal's analysis of sanctions compliance, stating that since 2023, the company has frozen relevant addresses an average of 4 weeks prior to the official sanctions by OFAC and NBCTF.
In 99% of relevant cases, the freezing also occurred before Chainalysis tagged the addresses involved in the report, and Tether's actions have led to a 94% decrease in stablecoin trading volume related to Iran.
Blumenthal released a report on September 28 from the Senate Permanent Subcommittee on Investigations, analyzing 846 wallets sanctioned or targeted for seizure due to involvement with Iran and its regional proxy organizations, of which 84% traded exclusively or almost exclusively in USDT.
The report accused Tether of not adequately freezing illegal wallets and called for investigations by the U.S. Treasury and Justice Departments into its anti-money laundering and sanctions compliance, noting that some wallets continued to have fund flows even after designation.
Tether stated on the same day that it has assisted in freezing approximately $550 million in USDT related to Iran since 2026, with relevant wallets identified by U.S. authorities as linked to the Central Bank of Iran and sanctions evasion networks, including over $344 million frozen in April and over $130 million in July.
The company collaborates with over 340 law enforcement agencies globally to enable rapid freezing of USDT once marked, thereby compressing the available liquidity of the sanctions network; funds are redirected from USDT-related paths to other assets or traditional channels, benefiting compliant and law enforcement partners while putting pressure on networks that rely on USDT liquidity.
Source: Public Information
ABAB AI Insight
Tether has emphasized direct collaboration with OFAC and multiple law enforcement agencies since 2023, having frozen assets totaling over $4.9 billion, with concentrated freezes on Iran-related addresses in 2026 (nearly $475 million combined in April and July) disclosed on the same day as the Senate report, directly responding to the report's accusation of "inadequate freezing."
The company freezes addresses before the official sanctions list is made public through information sharing with law enforcement partners, focusing resources on blocking high liquidity USDT channels to reduce Iran-related stablecoin trading volume; the motivation is to maintain USDT's compliant image as a dollar-pegged asset while minimizing the risk of regulatory investigations escalating.
Similar cases can be seen with other stablecoin issuers concentrating blacklist operations on specific addresses after sanctions escalated, as well as traditional banks freezing accounts post-OFAC designation; currently, Tether is transitioning from passive response to proactive early freezing as part of compliance enhancement, attempting to turn law enforcement cooperation into a differentiated advantage.
This reflects a restructuring of the industry chain driven by regulatory changes: stablecoin issuers are expanding control points from mere issuance and redemption to real-time freezing capabilities of on-chain addresses, combining preemptive law enforcement information with on-chain intervention, transforming USDT from a "high liquidity payment tool" to a "channel that can be instantly cut off by regulators," thereby altering the path choices of sanctions evasion networks.
ABAB News · Cognitive Law
The speed of freezing determines the compliance narrative, and the decrease in trading volume is the result.
On-chain intervention turns liquidity into a regulatory lever.
The report points out usage, and issuers respond with preemptive actions.