Tether Freezes $131M in USDT Linked to Iran’s Central Bank

Tether has frozen $131 million in USDT held across four wallets linked to the Central Bank of Iran. The restrictions followed a July 14 update to the US Treasury’s sanctions list. OFAC added the wallet addresses to the bank’s existing entry.

This freeze linked to Iran shows how much control an issuer retains over tokens like USDT moving on a public blockchain. Though the tokens remain visible in the wallets and US authorities did not seize them, their holders can no longer transfer or redeem the affected USDT.

OFAC added four wallets to an existing designation

The Treasury’s Office of Foreign Assets Control, or OFAC, has sanctioned the Central Bank of Iran since 2019. Its July 14 update added four more cryptocurrency addresses as identifiers connected to the bank. It’s not a new designation.

All four addresses operate on TRON, a blockchain widely used for moving USDT. Publishing them allows exchanges, custodians and compliance services to screen transactions involving the wallets.

Independent on-chain analyst Specter also traced the four wallets to both the Central Bank of Iran and activity linked to the Islamic Revolutionary Guard Corps (IRGC) before Treasury’s public confirmation. This attribution comes from Specter’s own blockchain analysis. OFAC’s official designation cites only the Central Bank of Iran.

Chainalysis reported on July 15 that the addresses had received more than $165 million in stablecoins. According to its onchain analysis, Tether froze the $131 million that remained accessible when the restrictions took effect. Some funds had already moved elsewhere.

Chainalysis also traced earlier funding to an institutional liquidity provider and an Asia-based payment processor. It did not publicly identify either business, leaving an important part of the transaction route unresolved.

>>> Read more: Tether freezes $225 mln USDT linked to crypto crimes

How Tether can make USDT unusable

USDT transactions appear on public blockchains, but Tether issues and administers the token. Its smart contracts include controls that can prevent designated addresses from sending or redeeming their balances.

That mechanism does not erase transactions or remove a balance from a wallet, so it remains visible onchain. But it locks the balance. The holder can no longer use the USDT for transactions. Freezing USDT linked to Iran doesn’t mean that Tether or any other authority took control or ownership of the balances. Asset seizures would require a separate legal process.

>>> Read more: UK Crypto Exchanges Under Scrutiny Over Iran Links

Almost $475 million has now been blocked

The latest $131 million is not the first freeze involving addresses attributed to Iran’s central bank. The action brings the total Tether has blocked to almost $475 million across wallets identified by OFAC as belonging to the institution. That total includes roughly $344 million frozen previously in April, which was tied to the same underlying OFAC blockade against the Central Bank of Iran. Last month OFAC also sanctioned major Iranian crypto exchanges, which the Central Bank had reportedly used to move funds in and out of stablecoins, which indicates a broader enforcement pattern beyond wallet freezes.

OFAC has cautioned that the wallet identifiers it publishes may not represent all addresses linked to a designated entity. In this case, the four TRON wallets disclosed in the July update may not capture the full set of addresses tied to Iran’s central bank, leaving open the possibility of additional, undisclosed wallets. Separate blockchain analysis points to a larger overall footprint: Elliptic estimates that Iran’s central bank has accumulated at least $507 million in USDT in total, used to support the rial. The gap between Elliptic’s estimate and the $475 million frozen so far reinforces OFAC’s own caveat that unidentified wallets may still be out there.

The next question is whether US authorities pursue seizure or forfeiture proceedings against the frozen balances. Investigators have not disclosed how much money moved before the restrictions. They may also identify additional wallets linked to the central bank. It has not transferred those funds to the US government, and it does not cover every crypto wallet associated with Iran or its central bank.

Where issuer control meets crypto’s original premise

Iran has faced restrictions on access to the global banking system for years, and stablecoins have offered a workaround. Dollar-linked value and international liquidity without a traditional correspondent bank. This action shows the limits of that workaround.

Crypto’s founding pitch was self-custody: control your own keys, and no bank, government, or company can touch your money. “Not your keys, not your coins” became the shorthand. The risk was always framed as someone else holding your wallet.

>>> Read more: Tether TRON Financial Crime Unit Freezes $300 M in Illicit Crypto

Now we see a version of the risk nobody built that phrase for. Nobody took the keys. Nobody seized the wallets. The Central Bank of Iran still controls those four addresses, and the tokens are still sitting there, visible on TRON, exactly where they were. Tether didn’t need the keys at all. It froze the token at the contract level, the same mechanism it has always held over USDT.

It’s less a break-in than a wall built at the exit. The wallet still opens. The tokens still exist. They just can’t go anywhere.

That distinction is what draws the comparison to central bank digital currencies, where a central authority holds that same freezing power over its own currency by design. No, this was not a purely internal decision on Tether’s part. The freeze followed a public OFAC designation, an external and published trigger. But for someone holding a centrally issued stablecoin, the practical experience, funds visible, funds unusable, looks a lot like what critics warn a CBDC could do.