Senator Blumenthal probes ties between Tether and Cantor Fitzgerald

The world’s dominant stablecoin is back in the congressional spotlight, and this time Wall Street is in the frame too.

On September 28, 2026, Democratic Senator Richard Blumenthal released a staff report arguing that Tether’s USDT has become a primary payment rail for Iran-linked networks and sanctioned entities tied to terrorist proxies. He is also pressing on Tether’s relationship with Cantor Fitzgerald, which owns a piece of the company and holds a large share of its US reserves.

What the report found

The report carries the title “Tethered to Terrorism.”

Blumenthal’s staff reviewed 846 wallets designated by two bodies: the US Treasury’s Office of Foreign Assets Control (OFAC) and Israel’s National Bureau for Counter Terror Financing. The review window ran from June 2021 to August 2026.

The headline figure: 84% of those wallets relied heavily on USDT. That made Tether’s token the predominant asset moving through the flagged addresses.

The split between the two designation lists is telling. Among wallets flagged by Israel, 87% used USDT. Among OFAC-designated wallets, the figure was 57%.

The report also singles out two sanctioned Iranian oil smugglers. According to the findings, the pair moved over $603 million in USDT through networks connected to Hezbollah and Houthi factions.

Where Cantor Fitzgerald comes in

Cantor Fitzgerald holds a 5% equity stake in Tether. The firm also manages a substantial portion of Tether’s US reserves, which are estimated above $100 billion.

Blumenthal is pointing to concerns over potential self-dealing tied to those connections. The worry, as framed in the report, is that a firm with both an ownership interest and a custodial role may not be the most neutral party when it comes to scrutinizing how the product is used.

To push the matter forward, Blumenthal formally asked Treasury Secretary Scott Bessent and Attorney General Todd Blanche to open inquiries into Tether’s operations. His focus is on two areas: sanctions compliance and anti-money laundering practices.

Tether’s response so far

Tether says it cooperates with law enforcement. The company claims it helped freeze around $550 million in Iran-affiliated USDT during 2026.

Unlike Bitcoin, USDT is issued by a central company that can freeze tokens at specific addresses, and Tether points to that capability as evidence it plays ball with authorities.

Freezing roughly $550 million is meaningful, but the two smugglers alone are said to have moved over $603 million. Critics will likely read that gap as proof the enforcement tools are reactive rather than preventive.

What this means for USDT holders and the market

For traders and investors, the immediate question is whether these requests turn into formal action. A letter from a senator is not an indictment, and Treasury and the Justice Department have not announced any investigation in response.

The research flags that investors may respond with increased caution, particularly those with heavy USDT exposure. The research notes that heightened scrutiny may affect USDT’s liquidity and adoption among institutional investors.

The Cantor angle adds a second layer of risk. If questions about self-dealing gain traction, the scrutiny could extend to how Tether’s reserves are managed, not just how its tokens are used.

According to the research, if probes uncover systemic issues within Tether’s operations, regulators could push stricter operational rules across all stablecoins, potentially reshaping how dollar tokens handle wallet screening, freezes and reporting.

The things to watch next are straightforward. First, whether Bessent’s Treasury or Blanche’s Justice Department responds publicly to Blumenthal’s requests. Second, whether Tether expands its freezing activity or publishes more detail on its sanctions screening. Third, whether Cantor Fitzgerald addresses its dual role as shareholder and reserve manager.