Senator Blumenthal: Week in Review 9/25/2026-10/2/2026

Slamming Lutnick-Linked Crypto Firm Propping Up Iran's Shadow Banking System

[WASHINGTON, D.C.] - U.S. Senator Richard Blumenthal (D-CT), Ranking Member of the Senate Permanent Subcommittee on Investigations (PSI), released a new report detailing how Tether and its dollar-pegged stablecoin (USDT) have become a significant financial lifeline within Iran's shadow banking network.

As part of its ongoing inquiry into the role of cryptocurrencies in illicit finance, PSI Democratic investigators conducted a forensic analysis of blockchain transaction data from 846 unique cryptocurrency wallets that have been sanctioned or targeted for seizure due to their association with Iran and its regional proxies. This analysis shows that Tether has, in effect, provided Iran access to a high-liquidity international payment system that the United States has assiduously sought to deny it.

"My new PSI report exposes how Tether and its flagship token have become central to Iran's shadow banking system, allowing the Iranian government to fund its regional proxies, commit human rights abuses, and pursue hostile drone and missile programs as they defy our sanctions regime," Blumenthal said. "The Trump Administration's glaring lack of oversight of cryptocurrency issuers has undermined our own national security interests. That is why I am calling on the Department of Treasury and Justice to immediately investigate Tether and hold it accountable for these potential sanctions violations."

A summary of PSI's key findings is below:

• Tether has become a primary illicit international payment system for Iran, allowing it to circumvent international sanctions on its banks: Of the 846 wallets sanctioned for their association with Iran and its terrorist proxies, 84% have transacted exclusively, or nearly exclusively, in USDT. These activities include efforts by the Iranian government to move funds into, and out of, Iran and to prop up the country's currency in the face of U.S. sanctions, including through the Central Bank of Iran.

• Tether serves as a central payment mechanism that interlinks Iran and its terrorist proxy organizations, undermining U.S. security interests in the region: Iran's cryptocurrency-based shadow banking network has reached significant volumes of funds and implicate different Iranian interests. In addition to supporting terrorist organizations, there is evidence that this shadow banking network is used for the procurement and sales of drones and other military equipment.

• Tether's failure to freeze illicit wallets and prevent abuse created the permissive environment under which Iranian shadowing banking could flourish: Prior to 2024, Tether did not comprehensively and consistently freeze wallets designated by counter-terrorism agencies and continues to fail to proactively block clearly illicit wallets. This absence of deterrence invited abuse: terrorist organizations such as Hamas shifted from transacting in Bitcoin and a mix of cryptocurrencies, to promoting USDT.

In letters sent to Treasury Secretary Scott Bessent and Attorney General Todd Blanche, Blumenthal referred PSI's findings to the Departments and called for thorough investigations into Tether's anti-money laundering and sanctions compliance practices.

In a letter to Bessent, Blumenthal raised concerns about the Trump Administration's lax oversight of cryptocurrency firms despite longstanding research and reporting on Tether's broader role in illicit finance, "Yet, since President Trump's return to the White House, investigations and enforcement actions into the cryptocurrency industry have been dropped, settled on meager terms, or even reversed. I fear this lenient self-dealing includes Tether, despite its role in propping up a country that the United States is currently at war with."

Blumenthal continued, "While Tether has become a powerful tool for foreign adversaries, terrorists, and illicit actors that are a danger to our national security, it has numerous close ties to the highest levels of the Trump Administration. Most prominently, Cantor Fitzgerald-which until recently was run by Commerce Secretary Howard Lutnick and is now controlled by his children-owns 5% of Tether and holds a substantial portion of the company's more than $100 billion of assets in the United States."

"The prospect of such a financial weapon being used against American interests is deeply troubling. I therefore request that Treasury review the Subcommittee's report, which is enclosed with this letter, and conduct a thorough investigation of Tether's anti-money laundering and sanctions compliance practices. If your investigation finds Tether has violated the Bank Secrecy Act, the International Emergency Economic Powers Act, or any other relevant provision of federal law, I encourage you to take the strongest appropriate action," Blumenthal concluded.

The full text of PSI's report is available here. Copies of Blumenthal's letters to Bessent and Blanche are available here and here.

Blumenthal further slammed Tether for propping up Iran's shadow banking system on Twitter/X.

"Tether seemingly has no shame-profiting from insidious use of its stablecoin for money laundering by Iran, drug traffickers & other illicit enterprises. Time to crackdown. DOJ & Trump officials can no longer look away from the overt, outrageous lawbreaking documented in my PSI report. Our national security is at stake," wrote Blumenthal on Twitter/X.

Blumenthal joined CNBC's Squawk Box to highlight his PSI report and to call for action to crack down on Tether's shady dealings.

"Tether is a preferred payment system for terrorist organizations-operating as a superhighway for the Iranian government to evade sanctions, carry out hostile drone & missile campaigns, & commit human rights abuses. I joined Squawk Box CNBC to discuss my new report," wrote Blumenthal on Twitter/X.

The full interview can be found here.

Condemning Trump's Incitement of Violent January 6 Attack that Rightfully Led to Jack Smith's Lawful Investigation

During a hearing with former Special Counsel Jack Smith, Blumenthal, a member of the Senate Judiciary Committee, underscored the seriousness of the events that predicated Smith's investigations into President Donald Trump, including the violent attack on the Capitol on January 6, 2021. During his exchange with Smith, Blumenthal also ran through the lawful investigative steps that Smith and his team took in order to pursue the case, including seeking an indictment from a grand jury composed of everyday Americans.

"I want to remind folks why we're here today. And I think a picture is worth a thousand words. We're here today because Donald Trump incited a mob to attack us-the Capitol, Members of Congress, to stop the counting of votes. He objected to the result of an election, and he tried to stop the peaceful transition of power by inciting rioters to attack the Capitol, including everybody here today," Blumenthal said.

"And we came to this very room on that day seeking safety, finding refuge. We were kept here for hours, and then we were given the choice to secretly go home, to leave here, as armed guards sought to protect us in this room, and I remember sitting over in that corner, trying to recharge my phone, so I could call my wife to tell her I was OK. That's what Donald Trump did on that day."

Blumenthal's exchange with Mr. Smith is available here.

Blumenthal further highlighted Jack Smith's testimony describing the lawful investigative steps Smith and his team took on Twitter/X.

"Trump incited violence on Jan 6 to prevent the transition of power-rightfully leading to Jack Smith's prosecution. Trump's blatant attack on democracy shows we must be vigilant against his assaults," wrote Blumenthal with an accompanying video on Twitter/X.

Blumenthal joined CNN's Jake Tapper to further discuss Smith's testimony.

"Jack Smith's testimony yesterday highlighted the facts that led him to indict Trump-the President incited riots on Jan 6 & exploited that mob action in an effort to prevent the transition of power. I joined The Lead CNN to discuss," wrote Blumenthal on Twitter/X.

The full interview can be found here.

Demanding Answers from Trump Administration on AI Oversight

Blumenthal, PSI Ranking Member, and U.S. Senator Elizabeth Warren (D-MA), Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, demanded answers from Treasury Secretary Scott Bessent about the Administration's delayed, secretive, and voluntary process to test and monitor advanced artificial intelligence models. In a letter sent to Bessent, the Senators raised concerns that the Administration's hands-off approach to A.I. oversight leaves the public, our financial system, and our national security vulnerable to the grave dangers of increasingly sophisticated, out-of-control A.I. models.

Pointing to recent revelations about the scale of the Hugging Face breach by rogue OpenAI agents and OpenAI's subsequent steps to limit an independent into the breach, the Senators wrote, "This rapid acceleration in the severity-indeed potential illegality-of A.I. safety failures demands rigorous, independent oversight, testing, and investigations from the federal government… Voluntary measures and self-policing clearly are not working: despite these sensational reports, Anthropic and OpenAI have both acknowledged that they have no plan to solve the grave dangers of increasingly sophisticated A.I. models."

The Senators continued, "Rather than confront the compounding risks of out-of-control and unregulated A.I., the White House has sought to shield major A.I. companies from public scrutiny, leaving Americans in the dark. In June 2026, the President signed an executive order requiring the creation of a classified 'benchmarking' process and 'AI cybersecurity clearinghouse' to test the capabilities of frontier A.I. models, a program in part led by the Department of the Treasury. However, despite reporting that some members of the Administration sought to make participation and disclosures mandatory, instead-reportedly after interventions from Mark Zuckerberg and his allies-the program was made expressly voluntary."

The Senators continued, "Finally, although the executive order prioritizes law enforcement action against anyone using A.I. to illegally access or damage other computers, no federal investigation into OpenAI, Anthropic, or Meta has been announced. The Treasury Department has not publicly disclosed any information about the incidents or what action it has taken to ensure remediation of A.I. security vulnerabilities. From all appearances, the benchmarking process and oversight regime outlined by the White House appears to be non-existent or asleep-at-the-wheel exactly when it's needed most."

"The American public cannot afford to wait for catastrophic failure before the White House wakes up, nor can it continue to alone trust the A.I. companies to monitor and control their increasingly sophisticated and dangerous models," the Senators concluded.

The full text of the letter is available here.

Blumenthal also slammed President Trump's "morally blinding" AI agreement he signed with tech leaders.

"Trump's "morally binding" safety pledge with AI CEOs is a bad deal-a distraction from a President who thinks it's all a hoax. OpenAI, Meta & Anthropic must be held legally accountable for their rogue, dangerous AI agents, including through my AI Risk Evaluation Act," wrote Blumenthal on Twitter/X.

On the Senate Veterans' Affairs Committee

At a Senate Veterans' Affairs Committee hearing to consider pending nominations, Ranking Member Blumenthal underscored the five nominees' jarring lack of qualifications for the roles they have been nominated for at the Department of Veterans Affairs (VA).

"I'm just going to be very blunt. I'm gravely concerned that none of these nominees have any experience with veterans' benefits law, whatsoever, not as judges, not as lawyers, not as advocates for veterans," Blumenthal said in his opening.

Blumenthal raised scrutiny over the nominees to be judges at the Court of Appeals for Veterans' Claims (CAVC). He first highlighted a watchdog report on nominee Robert Fleck, which revealed Fleck engaged in nepotism and lied about sharing sensitive information when he worked at VA's Office of General Counsel: "Mr. Fleck, you were found by VA's Office of Inspector General to have engaged in nepotism when - as a manager in the Office of General Counsel - you advocated for the employment of your wife in that same office. You will have to explain to the Committee why the report done by the Office of Inspector General is not disqualifying, and I appreciate the Chairman's staff subsequently sharing the documents and information with us, which should prompt all of us to have very strong concerns, and I intend to make further inquiries about this issue. We have a constitutional duty of oversight."

Ahead of the hearing, VA intentionally redacted and withheld documentation requested by Democratic Committee staff related to the investigation into Mr. Fleck, while providing the Committee Republicans with additional, unredacted documents.

Blumenthal called into question another CAVC nominee, Daniel Rendleman, and his qualifications for the role in light of his radical anti-abortion views: "Mr. Rendleman, if confirmed, you would have the power to decide whether a veteran's claim for reproductive health care coverage or reimbursement is denied. The radical anti-abortion views you espouse call into question your ability to make impartial judgments on abortion-related claims."

The full video of Blumenthal's opening is available here.

Blumenthal Bulletin

Blumenthal posted a Substack article about the Congressional passage of his Russian Sanctions legislation.

Blumenthal called for unanimous consent to pass his Kids Online Safety Act-but it was blocked by U.S. Senator Rand Paul (R-KY).

Blumenthal voted against legislation that fails to protect college athletes.

Blumenthal led the introduction of bicameral legislation to depoliticize military promotions.

Blumenthal urged a federal agency to investigate incidents at Oxford Compressor Station.

Blumenthal questioned President Trump on his invitation of Vladimir Putin to G20 on American soil.

Blumenthal questioned Trump's judicial nominees on who won the 2020 presidential election.

Blumenthal marked the start of Domestic Violence Awareness Month with members of Interval House.

Blumenthal celebrated heroes at the American Legion Post 3 Veterans Gala.

Blumenthal joined the Stamford Branch NAACP Dinner.

Blumenthal celebrated 50 years of service with Southwest Community Health Center.

Blumenthal attended the Durham Fair.

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